Salary-earners worried about retirement can let out an “EEE” in glee.
The Centre has dropped a proposal to tax pension savings while withdrawing the money on maturity.
This means it will continue with the policy of EEE (exempt, exempt, exempt) at all three stages of savings and will not opt for a proposed EET (exempt, exempt and tax at withdrawal).
The modification was announced in revisions to a direct tax code the Centre proposes to implement from next year. The revised code has promised several other sops to the middle class.
The tax code, which will be introduced in Parliament in the coming monsoon session, is expected to simplify tax rules, raise tax slabs and lift the ceiling for tax-free savings to Rs 3 lakh from Rs 1.6 lakh now. If all these promises are fulfilled, the total outgo for the salaried class will go down.
The plan to tax the savings at the last stage had sent shivers down the spine of those who were saving for post-retirement. The modifications suggest that the government did pay attention to the sense of disquiet.
Revenue secretary Sunil Mitra said: “We prepared the revised discussion paper on the basis of some 1,600 comments and suggestions we received.”
A realisation by tax collectors that EET would mean huge increase in paperwork also played a part in its burial.
The revised paper, too, will be open to changes based on suggestions which people can send over the next 15 days, the secretary said.
The comment box can be accessed on the Internet on the site finmin.nic.in. If a user clicks on “new discussion paper related to direct taxes code” in the update box, the comment box can be reached.
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