A lot of people are not sure if they have to pay the tax on the interest they earn on the Provident Fund after their retirement. Well, to clear some of the misconceptions, we have answered some of the frequently asked questions below.
Do I have to Pay Tax on the Interest I earn after Retirement?
Well, a lot of people are under an impression that they do not have to pay taxes on the interest they earn on the PF after their retirement but this is not true. The fact is that the people have to pay the taxes on the interest income on the provident fund post-retirement. This is taxed similarly to the interest earned on the bank deposits.
Is there any way to Save the Tax?
You can only save taxes when you invest in the provident fund during the employment. In addition to this, after the retirement, the savings can come in form of deductions while you are filing income tax. Apart from that, there is no way to save tax on the interest you earn on your PF.
Shall I look for any Alternative Investment?
Well, that depends on person to person. The fact is that the EPF offers the highest rate of return and now, you need to do some homework before you decide a plan for alternative investment. You need to consider the post-tax return of various investment options you have and then go for the one which is beneficial for you in the long run.
Could there be any relaxations in future?
Policies changes from time to time so there is no guarantee if the government would really provide any sort of relief in future. However, as per our option, the government should not tax the earnings for first few years after the retirement age as this would help people in planning out their retirement more efficiently.
These are the most commonly asked questions and we hope that the answer to these questions would help you in making crucial decisions and save yourself from any problem that may arise in future.