The concept of EET - exemption at the time of investment, exemption at the time of accrual of interest and tax at the time of maturity/withdrawal - is fine as long as it is restricted to deposits of any nature other than the terminal benefits.
Taxing the Employees' Provident Fund (EPF) at the time of withdrawal, be it in part or full, lacks logic. As the name suggests, the superannuation benefits are designed for people to lead a better life in old age. The government's proposal to tax the EPF at the time of withdrawal incurred the wrath of the middle class. But following protests, the government decided to address the legitimate concerns of the people and withdrew the proposal in toto with immediate effect.
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Current social security measures in India are not adequate and need a complete review. Although the finance minister's attempt to create a pensioned society and encourage employees to invest their savings in annuities is understandable, not many are willing to subscribe to this view and compelling them to do so is not desirable either.
Also, senior citizens have been let down by the Budget. Some senior citizens do not even get a fixed monthly income by way of pension. The government should consider freezing the interest rate on fixed deposits for these categories at nine or 10 per cent so that such senior citizens are assured of a fixed monthly return on their deposits. On the basis of this, they would also be able to plan reasonably well.
Srinivasan Umashankar, Nagpur
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