Finance Minister Nirmala Sitharaman said she is “open” to revising the Rs 2.5 lakh annual tax-free deposit cap on Employees’ Provident Fund (EPF) savings announced in the Union Budget 2021.
In her Budget speech on February 1, Sitharaman announced that depositors investing more than Rs 2.5 lakh in EPF in a year would have the interest liable for tax. The move is being seen as an attempt to block higher-income earners from using EPF savings to reduce tax.
Speaking to the Hindu BusinessLine on February 21, the finance minister said this could be “open to review” and also denied that it was aimed at discouraging high-income earners from saving in EPF.
“We have taken a call not to discourage those earning more than Rs 15,000 (per month) from being part of EPF. There can always be a discussion on the Rs 2.5 lakh limit. I can go back and review it. But it is a matter of principle. We are only touching those who are putting far more (in EPF) than what an average Indian’s earnings is per month,” she added.
Sitharaman also said there was s “no plan to merge EPF with the National Pension Scheme (NPS)” and these would continue to “remain in its present form.”