Published On: Tue, Mar 1st, 2016

GPF stays on exemption list, only EPF interest to attract tax

New Delhi:Seeking to dispel fears of the government employees, the centre today said General Provident Fund (GPF) will not be taxed on withdrawal and only the interest that accrues on contributions to Employee Provident Fund (EPF) made after April 1 will be taxed while principal will continue to be tax exempt.

Revenue Secretary Hasmukh Adhia said that GPF or  PPF on withdrawal will continue to be out of the tax ambit.

Revenue Secretary Hasmukh Adhia said that GPF or PPF on withdrawal will continue to be out of the tax ambit.

In an interview to PTI, Revenue Secretary Hasmukh Adhia said the Budget proposal to tax 60 per cent of employee provident fund (EPF) withdrawal will affect less than one-fifth of employees with high salaries.

The proposal, he said, is to tax the interest accrued on PF contributions made after April 1, 2016. “The principal amount will not be taxed and will continue to remain tax exempt on withdrawal. What we have said is 40 per cent of the interest accrued on contributions made after April 1 will be tax exempt and its remaining 60 per cent will be taxed.”

This 60 per cent will also be tax exempt if it is invested in a pension annuity schemes, he said. “This is not a revenue mobilisation exercise,” he added.

Adhia said that no part of PPF will be taxed and the present scheme of investment up to Rs 1.5 lakh in a year will continue to be tax exempt. GPF or PPF on withdrawal will continue to be out of the tax ambit.

Inputs with PTI

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