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The proposed tax on PF incomes has its logic, but operational details need a revisit Finance Minister Nirmala Sitharaman has stressed that Budget 2021-22 raises resources to push the economy without increased taxation. However, one change to the income tax law proposed in the Finance Bill, 2021, has triggered anxieties for the salaried class: withdrawing tax exemption on interest income accrued into Provident Fund accounts arising out of employee contributions exceeding ₹2.5 lakh ‘in a previous year in that fund,’ on or after April 1, 2021. The rationale some employees are contributing huge amounts into their PF accounts and getting tax-free incomes. Subsequently, the Revenue Department has pointed out the tax will only affect a small group of ‘high net-worth individuals’ (HNIs); the 100 largest employees’ PF (EPF) accounts had a combined balance of over ₹2,000 crore. It can be no one’s case that a social security scheme for formal sector workers should become an

Nirmala sitharamanNational pension systemRevenue departmentProvident fundFinance minister nirmala sitharamanFinance billAn ambiguous levyProposed tax on pf incomesOperational detailsBudget 2021 22Increased taxationChange to the income tax lawSalaried classInterest income accrued into provident fund accountsEmployee contributionsHigh net worth individuals