Arun Jaitley to take final call on PF withdrawals

Confounding confusion over tax treatment of Provident Fund contributions proposed in the Union Budget, the Finance Ministry late on Tuesday said a final view was yet to be taken on the subject. The Finance Minister, who was not aware of the touchy nature of the subject of PF, would now take a fresh call on the matter. There would be no tax if the PF funds are invested in annuity funds, a ministry statement said. The ministry said for members of the Provident Fund, who invested their withdrawals in annuity funds, no tax would be levied. If not, 60% of the money withdrawn from the PF would be taxed. Wat has created the confusion is whether only the interest component will be taxed upon withdrawal or the whole corpus itself, built after April 1 this year, is taxed. Revenue Secretary Hasmukh Adhia had alluded that only interest would be taxed and not the corpus. “We have received representations today from various sections suggesting if the amount of 60% of corpus is not invested in annuity products, tax should be levied only on the accumulated returns of the corpus and not on the contributed amount,” it said. “We have also received representations asking for not having any monetary limit on employer contribution under the EPF because such limit is not there in the NPS. The Finance Minister would be considering these suggestions and taking a view on it in due course.”