Govt drops plan to tax PF withdrawals - Source - TOI

In a major relief to the middle class, the government on Tuesday proposed to drop its earlier suggestions of taxing withdrawals from provident funds, pension funds and pure life insurance schemes and of imposing tax on retirement and in-service perks given by employers. DTC[Direct Tax Code] Gets Less Taxing Change: Provident fund, pension funds, life insurance to continue under EEE (exemptexempt-exempt) system instead of EET (exempt-exempt-taxation) Implication: Withdrawals from these schemes will remain tax-exempt as at present. Earlier draft of Direct Tax Code (DTC) had proposed to tax them C: Interest payments on home loans up to Rs 1.5 lakh per annum to be tax-exempt for self-occupied homes I: Concession that earlier draft had proposed to remove will continue to be available C: Long-term capital gains to be imposed on graded basis I: Currently, zero tax on such gains. Earlier draft had proposed to add the gains fully to income. Revisions means only a part of the gains will be added, depending on how long the asset has been held C: Employer’s contribution to retirement benefits to be tax-exempt I: Earlier draft would have added these as perks to your income and hence raised tax liability. That won’t happen now C: MAT to be on book profits I: Earlier draft proposed minimum alternate tax (MAT) on basis of company’s gross assets, meaning even loss-making firms may have had to pay the tax. That won’t happen now. More information @ http://timesofindia.indiatimes.com/india/Govt-drops-plan-to-tax-PF-pension-funds-withdrawals/articleshow/6052092.cms Source - TOI