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Mihir Tanna  |1018 Answers  |Ask -

Tax Expert - Answered on Oct 20, 2022

Mihir Ashok Tanna, who works with a well-known chartered accountancy firm in Mumbai, has more than 15 years of experience in direct taxation.
He handles various kinds of matters related to direct tax such as PAN/ TAN application; compliance including ITR, TDS return filing; issuance/ filing of statutory forms like Form 15CB, Form 61A, etc; application u/s 10(46); application for condonation of delay; application for lower/ nil TDS certificate; transfer pricing and study report; advisory/ opinion on direct tax matters; handling various income-tax notices; compounding application on show cause for TDS default; verification of books for TDS/ TCS/ equalisation levy compliance; application for pending income-tax demand and refund; charitable trust taxation and compliance; income-tax scrutiny and CIT(A) for all types of taxpayers including individuals, firms, LLPs, corporates, trusts, non-resident individuals and companies.
He regularly represents clients before the income tax authorities including the commissioner of income tax (appeal).... more
Abel Question by Abel on Oct 20, 2022Hindi
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As I understand I am liable for tax on income generated in India as an Indian Citizen, however my recent visit to Provident fund office got me wondering on hearing the office at PF office that the principal amount will be exposed to TDS on the Principal contribution that I do. 

Does this mean that now on saving will also be taxed? Please advise:

a) Does it make sense to continue investment in Provident Fund if the principal investment gets taxed?

b) Isn’t the income tax, by law, on the income generated, but never on the Principal or capital?

Ans: Investment in provident fund is still one of the best modes considering rate of return and risk free return. From FY 2021-22, rules have changed.

Interest on an employee's contribution to an EPF above Rs 2.5 lakh per annum is taxable and accordingly interest is also subject to TDS.

If employer is not contributing in the provident fund account, the threshold will be Rs 5 lakh per annum.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Investment in securities market are subject to market risks. Read all the related document carefully before investing. The securities quoted are for illustration only and are not recommendatory. Users are advised to pursue the information provided by the rediffGURU only as a source of information and as a point of reference and to rely on their own judgement when making a decision. RediffGURUS is an intermediary as per India's Information Technology Act.

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