Employees’ Provident Fund Organisation (EPFO) has raised strong objections against the draft Direct Tax Code (the draft) as the draft proposes to introduce a new Exempt-Exempt-Taxation (EET) system. Under EET system, the contributions and earnings thereon are exempt from tax but all the withdrawals at the time of retirement would be taxable at prevailing personal tax rate.
The new system is to replace the prevailing EEE (Exempt-Exempt-Exempt) system. Under the prevailing system, EPFO members draw benefit of fully tax-free treatment on their contributions, interest income and withdrawal of accumulated savings at the time of retirement.
EPFO authorities ruled out the move tagging it as violative of the principles of natural justice and equity for the workers under the coverage of EPFO. They explained that such shift to EET regime would make the EPFO an unattractive option for a major portion of the workforce voluntarily contributing towards PF in excess then the mandatorily fixed norms.
Also Check: Other Legal Aspects
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