The impact of EPF taxation

If something is good, then more of it must be better, right? Maybe not always, but this is a firm belief of EPF fans in India. For long, contributing extra to EPF than the requirement was standard practice among salaried individuals. This extra contribution was not matched by the employer, nor did it provide any kind of a tax break on the invested amount. However, in every other way, it was not a bad deal. The interest earned was not taxable, the rate was always high compared to alternatives, and there was an effective sovereign guarantee on the money. The lock-in was onerous, but given the high and tax-free interest rate, it was a good trade-off. Now, from this year onwards, the story has changed. Those who routinely get an extra-large EPF deduction need to pay attention. From this year onwards, the tax-free interest income is available only till an annual EPFO deposit of Rs