New Delhi: If you thought government is going to brake its paddle after deciding to tax your hard-earned and saved EPF money, then you’re mistaken. If our sources in Finance Ministry are to be believed, government has made its mind to tax all the money invested under section 80C (current limit is 1.5 Lacs) at the time of withdrawal. The blueprint is ready and it’s soon going to be passed in coming sessions of parliament.
“The idea is very similar to the step we took for EPF, which is- discourage savings, and discouraging spending too. Since people will see no benefits now, they will stop savings u/s 80C. Also, a higher tax liability would cut on their actual spending ability. This is in sync with Indian philosophy of spending less and living an austere style of life,” said one source in Finance Ministry.
“Since we’re a Hindu Nationalist government, we must target for Hindu rate of growth, which is possible only when we cut on industrial production. A decline in spending and cash-flow would help achieve that goal of lower growth, we believe,” another economic expert in the Modi government explained to Teekhi Mirchi.
When asked whether that would adversely affect India’s rating abroad, a source privy to the development revealed that India will again tweak growth formulas in a way that growth numbers as they are known to rating agencies such as Moody’s do not get affected.