Arun Jaitley's Budget 2016: Arun Jaitley speech while presenting Budget 2016 made a revelation that shocked income tax payers as he broke from long-held practice of exemption at all stages for Employees Provident Fund (EPF) and instead actually imposing a retirement tax at the time of final withdrawal on 60 per cent of contributions made after April 1, 2016 – it includes not just EPF but other schemes too. (Express Photo)
Budget 2016 on taxing EPF: Union Finance Minister Arun Jaitley presented the Union Budget 2016-17 in the Parliament yesterday. The FM has made Employee Provident Fund (EFP) and National Pension Scheme (NPS) withdrawals on retirement partially taxable in the Budget. Announcing measures for moving towards a pensioned society, Finance Minister Arun Jaitley said, "Pension schemes offer financial protection to senior citizens. I believe that the tax treatment should be uniform for defined benefit and defined contribution pension plans." He said, "I propose to make withdrawal up to 40 per cent of the corpus at the time of retirement tax exempt in the case of National Pension Scheme. In case of superannuation funds and recognised provident funds, including EPF, the same norm of 40 per cent of corpus to be tax free will apply in respect of corpus created out of contributions made after April 1, 2016." (AP)
Arun Jaitley's Budget 2016: In order to bring greater parity in tax treatment of different types of pension plans, it is proposed that the contributions made on or after April 1, 2016 by an employee participating in a recognised provident fund and superannuation fund, up to 40 per cent of the accumulated balance attributable to such contributions on withdrawal shall be exempt from tax, said Budget Memorandum. (PTI)
Arun Jaitley's Budget 2016: It is proposed to provide that any payment in commutation of an annuity purchased out of contributions made on or after April 1, 2016, which exceeds 40 per cent of the annuity, shall be chargeable to tax. (AP)
Arun Jaitley's Budget 2016: Under the existing provisions of section 80CCD, any payment from National Pension System Trust to an employee on account of closure or his opting out of the pension scheme is chargeable to tax. (PTI)
Arun Jaitley's Budget 2016: Announcing measures for moving towards a pensioned society, Finance Minister Arun Jaitley said, "Pension schemes offer financial protection to senior citizens. I believe that the tax treatment should be uniform for defined benefit and defined contribution pension plans." (PTI)
He said, "I propose to make withdrawal up to 40 per cent of the corpus at the time of retirement tax exempt in the case of National Pension Scheme. In case of superannuation funds and recognised provident funds, including EPF, the same norm of 40 per cent of corpus to be tax free will apply in respect of corpus created out of contributions made after April 1, 2016." (PTI)
Arun Jaitley's Budget 2016: The minister also said that the annuity fund which goes to the legal heir after the death of pensioner will not be taxable in all three cases. He proposed a monetary limit for contribution of employer in recognised Provident and Superannuation Fund of Rs 1.5 lakh per annum for taking tax benefit. (AP)
Arun Jaitley's Budget 2016: The minister also proposed to exempt from service tax the Annuity services provided by the National Pension System (NPS) and Services provided by EPFO to employees. Government has also proposed that 14 per cent service tax on services provided by Employees’ Provident Fund Organisation (EPFO) to employees, being exempted, with effect April, 2016. (PTI)
Arun Jaitley's Budget 2016: The budget has also proposed to increase the threshold for deducting tax deducted at source (TDS) on payment of accumulated balance due to an employee in EPF Rs 50,000 from existing Rs 30,000. Last year budget had provided that the members of private provident fund trusts will not have to pay tax on pre-mature withdrawals provided the amount is either less than Rs 30,000 or their tax liability is nil even after including the withdrawn sum to their income. (PTI)
