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How Does Income Tax on EPF Patial Withdrawal work ?

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Offline raj

How Does Income Tax on EPF Patial Withdrawal work ?
« on: March 05, 2016, 04:48:48 PM »

A lot of fuss are going through after the Union Budget, when announcement made by FM on EPF partial withdrawal taxation , Finance Minister has stated inthe Budget Session that
In case of superannuation funds and recognized provident funds, including EPF, the same norm (referred to NPS) of 40% of corpus to be tax free will apply in respect of corpus created out of contributions made after 1.4.2016.

How Tax on EPF patial withdrawal impact ?

Total corpus Rs 31, 96,000
Contributions made Rs 11, 40,000
Interest earned: Rs 20, 56,000

Note: The interest rate in EPF is calculated on monthly reducing balances.

Now, as per the Budget 2016 proposals and clarifications thereafter, here's the tax hit:

Contributions of Rs 11, 40,000 remain tax-exempt.
40 per cent of total interest earned i.e Rs 20,56,000 comes to Rs 8,22,000 which will be tax-exempt.
The balance 60 per cent of the total interest earning will be taxed as per the slab.

stated in Economic Times


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