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    Hello and welcome to the web chat with Homi Mistry, Partner, Deloitte Haskins & Sells LLP on 'Demystifying the EPF tax fiasco'



  • S


    When I joined the EPFO, it was EEE Now they are changing the rules of the game. Why am I not allowed to exit EPFO now? Will annuity payments be tax exempt? The current annuity payments from NPS are taxable?


    The proposed amendment is prospective and does not apply to contributions made prior to 1 April 2016. Recently the EPFO has amended the rules whereby the employer's contributions and the interest thereon cannot be withdrawn before you are 58. Annuity payments will be taxable just as the annuity payments under the NPS are currently taxable.

  • A


    It is been said that only contribution after Apr 1,2016 shall be taxable - Q1 What about Interest on Principal + interest ( Gross Principal) as on 31.3.2016 up to retirement? Q2 Do employer /EPFO needs to maintain two separate accounts?


    Since the proposed amendment applies to contributions made from April 2016 onwards only, upon withdrawal, the tax will apply only to 60% of the accumulated balance attributable to such contributions only. No tax will apply to the contributions made before April 2016 and the interest thereon. Currently there is no such requirement to maintain 2 separate accounts.

  • D


    In the recent budget a further provision has been made for an additional exemption of 50000 for the interest on housing loans of 35L, provided house is less than 50L. Since we cannot get a house today for 50L does this really benifit all. In my opinion there should not be any limits of 35L or 50L. Ypur thoughts pls?? The surcharge of 15% for incomes more than 1Cr. is pointing towards HNIs. This should have been increased much higher and a benifit given to salaried classes by enhancing tax slabs instead of keeping same. Your thoughts pls?? There is a lot of debate of taxing of PPF and PF. Your thoughts pls??


    While this provision may not benefit home buyers in tier-1 cities, it may prove beneficial to tax payers in tier-2 and 3 cities where real estate prices may not be as steep. While PPF continues to be under the Exempt- Exempt - Exempt category, the proposal to tax PF has met with much debate from various quarters. We will have to wait and see how the provision is finally enacted when the Finance Bill is passed in Parliament.

  • R


    After proposing tax on 60% of EPF withdrawal, will EPF lose sheen to NPS?


    Returns on the investment in the NPS are linked to the market while the EPF has a fixed rate of return. Hence, it is difficult to predict at this stage, which will turn out to be more beneficial. However, the proposed amendments do bring parity in the taxation of the NPS and EPF on withdrawal unlike the existing tax treatment.

  • K


    My father is retiring this year Dec 2016 as Clerk from a nationalized Bank. How this EPF tax will affect his retirement benefits?


    Since the proposed amendment applies to contributions made from April 2016 onwards only, upon withdrawal, the tax will apply only to 60% of the accumulated balance attributable to the contributions during the 9 months i.e April 2016 to December 2016.

  • S


    While I have withdrawn my EPF since I started as a freelancer, it would be great if you could give some guidance on how to file for IT returns when receiving income from more than one source. Most of them just deduct a professional tax, what all would I need when filling the form since there is no consolidated Form 16 anymore?


    Income on which tax is withheld by every person gets reflected in your Form 26AS, which can be downloaded from your account on the Income-tax portal. The Form 26AS will give you a snapshot of all the income paid to you and the tax deducted thereon. There could also be some other fees you have received on which no tax has been deducted at source. Refer to your bank statement / contracts to make sure such receipts are also captured while you are filing your return.

  • B


    Sir, I am a state-government employee. The recent announcements regarding EPF tax suggests that government employees are exempt from the notification. Are state-government employees also exempt?


    The proposed amendments apply to a Recognized Provident Fund only. If you are contributing to a Statutory Provident Fund set up under the Provident Fund Act 1925, then these amendments will not apply to you.

  • S


    Will tax now apply to withdrawals from PPF also?


    No. PPF still continues to be exempt from tax at withdrawal. Interest received on PPF also continues to be exempt from tax. It still continues under the Exempt -Exempt -Exempt regime.

  • M


    Earlier, when I had joined my company, I had the option of working under contract with the company or as a full time employee of the company. Now that the Government has proposed tax on 60% of EPF, is it better to switch my mode before April 1st in order to save on taxes? If not, what do you suggest?


    If you expect to invest your savings in avenues which would give you a better post tax return than the EPF, you may opt to switch to a contractor arrangement. Do make sure that your organisation will not hold you liable to PF even as a contractor.

  • S


    Hi! I was employed at HSBC InvestDirect for 9 months, and I could not withdraw my EPF then. The company has shut its operations a few years back. Is there a way I can withdraw my balance without the organisation facilitating it?


    Recently, the EPFO has made it possible for employees to apply for withdrawal of their PF balances without the employer's attestation. Employees whose details like Aadhaar number and bank account number have been seeded into their UAN and whose UAN has been activated, may submit claims in Form 19, Form l0C and Form 31 directly to the commissioner without attestation of their employers for fast settlement of claims.

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