EPFO Taxation limit

EPFO Taxation limit

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Honest Middle Class Indian Tax Payer started this petition to Honourable Finance Minister

EPFO has been and will always be a mean to save for retirement, for middle class and upper middle class people. People working in private sector or Non-government jobs use EPFO to accumulate wealth for long term retirement benefits - it being exempt from Tax on redemption. 

However, in the 2021-22 budget, Honourable Finance Minister (Nirmala Sitharaman) has decided to put a limit of 2.5 lacs per year tax free interest, siting an example of people contributing "1 crore a month" every month and the people having income that would amount to 2.5 lacs a year tax free interest for PF amount is only 1 percent.

This is unfortunate in many ways. As middle class, we can not invest a lot of money in high risk / equity or Bank FDs or any such means.

Here are the reasons:

1. If there is a long term capital gain - we need to pay tax on that amount, however if we lose the money - do we have any support from govt?

2. If a bank goes bankrupt, we can only claim upto 5 lacs per bank account irrespective of how much money you may have in your account / NRV with the bank.

3. If we are being taxed for EPFO pension amount - do we get additional benefit as pension based on how much taxes we have paid? For example if someone has paid in his lifetime 3 crores of tax in total - can he be provided at least 3lacs a year
(1% a year for 20 years)? At present there is no difference between a person who pays 3 lacs a year tax or 30 lacs a year tax - no one gets any benefit. So people paying higher taxed (salaried employees) feel they are being targeted always.

4. In other countries people paying taxes get minimum social benefits - basic health and education. In India, what benefit can we claim as an honest individual tax payer from govt?

There are a lot many ways for govt to get money - EPFO is not one of them. I sincerely request you to please consider removing the 2.5 lacs a year tax free interest threshold for contributions.

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