होम Banking Tax Talk: Investing in EPF & Ulips? Take note of I-T changes Banking March 1, 2021 Updated: 3 days ago Tax Talk: Investing in EPF & Ulips? Take note of I-T changes By Expert News Facebook Twitter Pinterest WhatsApp Share - Advertisement - However, in Budget 2021 the government has proposed to impose a monetary limit on income tax exemption allowed in respect of investments made by individual taxpayers in EPF or Ulips. By Shailesh Kumar The Employees Provident Fund (EPF) scheme has been one of the preferred investment options for the salaried taxpayer. In FY20, EPF had offered an interest rate of 8.50%, which is much higher than that offered by commercial banks on term deposits. Again, interest income from investment in EPF was also exempt from income tax, without any monetary limit. Thus, EPF was an attractive investment option, especially for employees in higher salary brackets who would make additional voluntary investment in EPF over and above 12% of salary as required under EPF regulations. Another popular investment instrument for middle-class taxpayers has been unit-linked insurance plans (Ulips). Like EPF, income/ bonus arising from Ulips to the investors has been exempt from income tax without any monetary limit, which made Ulips an attractive investment option. Additionally, Ulips offered an option of availing tax-free returns linked to the securities market, which made it all the more attractive post withdrawal of income tax exemption to long-term capital gains from sale of listed securities. However, in Budget 2021 the government has proposed to impose a monetary limit on income tax exemption allowed in respect of investments made by individual taxpayers in EPF or Ulips. Tax on EPF The government has proposed that if an individual’s investment in his EPF account exceeds Rs 2.5 lakh in any financial year starting on/ after April 1, 2021, interest earned on such investment in excess of Rs 2.5 lakh would not be eligible for income tax exemption. This move will not only impact employees making voluntary EPF contribution over and above mandatory contribution of 12% of basic salary, but also those high salaried employees, whose annual contribution in EPF exceeds Rs 2.5 lakh even if their contribution is limited to 12% of basic salary. It may be noted that income tax exemption will continue in respect of contributions made till March 31, 2021, even if annual contribution in these earlier years exceeded the newly introduced monetary limit of Rs 2.5 lakh. Tax on Ulips Similarly, for Ulips, the government has proposed that income tax exemption allowed under Section 10(10D) will be available only to those policies issued on/ after February 1, 2021, where annual premium or aggregate of annual premium does not exceed Rs 2.5 lakh. It may be noted that income tax exemption will continue in respect of Ulips issued till January 31, 2021, even if annual premium in earlier years or even in future years exceeds the newly introduced monetary limit of Rs 2.5 lakh in future years. Taxpayers must keep in mind these new proposed changes in income tax law, while planning their future investments. The writer is partner, Nangia & Co LLP Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter. Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates. Source link Like this: Like Loading... Related - Advertisement - Tags investing in epf tax on epf tax talk ulips Facebook Twitter Pinterest WhatsApp Share Expert Newshttps://expertnews.in - Advertisement - Stay Connected 16,985फैंसलाइक करें 2,458फॉलोवरफॉलो करें 61,453सब्सक्राइबर्ससब्सक्राइब करें Must Read Top stories Sexual harassment charge against karnataka minister: Man attempts self-immolation Expert News - March 4, 2021 - Advertisement - Top stories Central Warehousing Corporation celebrates 65th Foundation Day March 4, 2021 Banking Sterling steadies vs dollar after UK budget released March 4, 2021 Banking YES Bank gets shareholders’ nod to raise Rs 10,000 crore March 4, 2021 Related News Top stories Sexual harassment charge against karnataka minister: Man attempts self-immolation March 4, 2021 Top stories Central Warehousing Corporation celebrates 65th Foundation Day March 4, 2021 Banking Sterling steadies vs dollar after UK budget released March 4, 2021 Banking YES Bank gets shareholders’ nod to raise Rs 10,000 crore March 4, 2021 Top stories Mumbai: ‘Fatka’ thief gets two years RI for stealing mobile phone March 4, 2021 - Advertisement - Leave a Reply Cancel reply Share this: Tweet Like this: Like Loading... Related
English
हिन्दी