EPF nonsense

Hello Yadwendra Singh, Question 1 - why people who are already paying taxes, government keep taxing with one mean or other? Answer - I do not think you have read or even understood my post properly. Please read my post again fully, I repeat again, High-Income people needs to be taxes more, an individual who puts 2.5L yearly to EPF is not a middle class by any means, 2.5L is the yearly CTC for most of the people in India. Question 2 - Why not come up with a solution to catch those who are still not paying taxes ? Answer - Yes, I agree with you and also want to be done. The Govt have done a lot of things here since 2014 if you can just google the same. The Modi government has taken several steps since 2024 to combat tax evasion and improve tax compliance, ensuring that those who are still evading taxes are brought to book. Tax evasion remains a significant issue in India, with many individuals and businesses underreporting income or failing to pay taxes altogether. In response, the government has implemented a range of reforms and initiatives to make tax collection more efficient and to catch tax evaders. Here's a summary of some of the key steps and initiatives taken: 1. Expansion of the Tax Base: The government has focused on increasing the number of tax filers through various initiatives aimed at bringing informal and small businesses into the tax net. Targeting the Informal Sector: Since 2024, the government has intensified efforts to formalize the economy by encouraging more businesses to adopt digital payments, use the Goods and Services Tax (GST) network, and file tax returns. Simplified Tax Regime for MSMEs: To encourage small businesses to pay taxes, the government has introduced simplified tax filing procedures for Micro, Small, and Medium Enterprises (MSMEs). This reduces the compliance burden and incentivizes businesses to declare their income. 2. Use of Technology & Data Analytics: The Modi government has increasingly relied on technology and data analytics to identify tax evaders and improve the tax system. National E-Assessment Centre (NeAC): The e-assessment system introduced by the Income Tax Department has been ramped up in 2024 to identify discrepancies in tax returns. The system uses artificial intelligence (AI) and data mining to flag irregularities and identify tax evaders automatically. This eliminates the need for human intervention and increases transparency. Data Matching and Cross-Verification: Tax authorities are leveraging big data from various sources such as GST returns, PAN data, and bank transactions to track income and spending patterns of individuals and businesses. For example, the government is cross-checking discrepancies between income tax returns (ITRs) and GST filings to detect underreporting of income or evasion. 3. Stringent GST Enforcement: The government has continued to strengthen enforcement under the Goods and Services Tax (GST), which has become a major source of revenue collection. GST Scrutiny: Authorities are increasingly scrutinizing businesses that consistently show low turnover or fail to meet GST filing deadlines. The GST Network (GSTN) now uses data analytics to track suspicious activities and generate alerts for tax officers. Increased Penalties for Non-Compliance: The government has raised the penalties for businesses and individuals failing to comply with GST regulations. This includes heavy penalties for late filing, underreporting, and false invoicing. E-Way Bill Monitoring: The e-way bill system to track the movement of goods has been made more robust, ensuring that goods worth more than ₹50,000 are properly tracked and taxed. This has helped reduce evasion in the transport and logistics sector. 4. Tighter KYC Norms and Digital Payment Push: One of the critical steps to curb tax evasion is ensuring that all transactions are traceable and accounted for. Digital Payments Incentives: The government has rolled out incentive schemes for individuals and businesses to promote digital payments and cashless transactions. These transactions are easier to track and help increase tax compliance, especially in the informal sector. Know Your Customer (KYC) Norms: The government has strengthened KYC norms for financial transactions, making it difficult for individuals and businesses to evade taxes through off-the-books transactions. Banks and financial institutions are required to link all accounts with Aadhaar and PAN, ensuring that large transactions are subject to proper scrutiny. 5. Proactive Use of PAN and Aadhaar Linking: The government has pushed for stricter use of the Aadhaar-PAN linkage to identify those evading taxes. Mandatory PAN-Aadhaar Linking: Since 2024, the government has enforced a mandatory PAN-Aadhaar linking requirement, making it easier to track individuals who are hiding their income or failing to file returns. This makes it harder for individuals to maintain multiple identities or evade taxes under different names. Income Disclosure Scheme (IDS): The Voluntary Disclosure Scheme encourages people to declare their unaccounted income and pay tax on it. Those who fail to do so may face penalties or other legal consequences. 6. Anti-Money Laundering and Black Money Crackdown: The government has continued to tighten its measures against black money and money laundering, with a special focus on offshore accounts and unreported income. Benami Transactions Act: The Modi government has aggressively pursued cases under the Benami Transactions (Prohibition) Act, which prohibits property transactions in the name of another person to conceal the identity of the real owner. The government has seized benami assets and arrested individuals involved in such activities. Crackdown on Shell Companies: The government has continued its crackdown on shell companies, which are used to launder money and evade taxes. In 2024, the Ministry of Corporate Affairs (MCA) took action against several thousand companies that were found to be non-compliant or were involved in fraudulent activities. 7. Strengthening the Role of Tax Authorities: The government has made efforts to empower tax authorities and ensure they have the resources and tools to catch tax evaders. Income Tax Department Reforms: There have been efforts to increase the capacity of the Income Tax Department to monitor and track tax evasion. This includes more funding, better training, and increased staffing to handle the increased volume of tax filings and investigations. Taxpayer Charter: The government introduced the Taxpayer Charter to ensure that taxpayers are treated fairly, while also providing a system to punish those who deliberately evade taxes. 8. Crackdown on Black Money and Offshore Accounts: Multilateral Cooperation: India has entered into several multilateral agreements for sharing tax-related data, particularly through OECD’s Common Reporting Standard (CRS) and the Automatic Exchange of Information (AEOI). This has led to better tracking of Indian black money stashed in foreign banks and tax havens. Black Money Act: The government has intensified investigations under the Black Money (Undisclosed Foreign Income and Assets) Act, which penalizes individuals with undeclared foreign assets. 9. Awareness and Education: The government has launched public awareness campaigns to educate taxpayers about the benefits of paying taxes and the consequences of tax evasion. Taxpayer Education: Efforts to simplify the tax filing process and educate the public about the benefits of compliance have been ramped up. This includes online seminars, webinars, and awareness drives targeting specific sectors or regions with high levels of tax evasion. 10. Enforcement of Tougher Penalties for Evasion: The government has introduced stricter penalties and prosecutions for tax evaders. Stronger Enforcement: The government has implemented tougher penalties for individuals and businesses caught evading taxes, including imprisonment, heavy fines, and the seizure of assets. Whistleblower Incentives: The government has also introduced schemes to reward individuals who report tax evasion and unaccounted income. Conclusion: Since 2024, the Modi government has significantly enhanced efforts to track and catch tax evaders through a combination of technology, better enforcement, stricter regulations, and public awareness. With these measures, the government hopes to curb tax evasion, widen the tax base, and ensure that everyone pays their fair share of taxes. While progress has been made, it remains an ongoing challenge that requires continued innovation and effective implementation of policies. more  

The problem is peoples do not know the head or tail of anything but want to be judge in everything is a problem in the world. First we need to know the entire truth / fact right from start to the end to know what exactly is the issue or is happening. The situation is such that even if people get fever then they Modi Govt will to be blamed. If some there is a pothole in one road, the entire country and the govt is slammed and put to poor light in the entire country with social media propaganda forgeting all the good work of the current govt. It is like you do 100 good things but one bad thing to a person but the person will remember for the one bad action only. Such is the pathetic people's age we live in. We need to define what/ who is the middle class is, i do not think if we are depositing 2.5L to PF /yearly or any other fund for the matter is not a middle class by any remote chance also. 2.5L is a CTC for most of the middle class people in india and the one who is depositing such amount to EPF alone must be upper middle class / high class / high networth individuals / taxpayer, Right ? I do not think anyone here at Localcircle and most of the other people on social media even have read the law /notification correctly but are ready to bash the govt for everything going on the planet Earth. In this digital world, this is pathetic to see such people ruining the show like this. Prove me wrong? The Problems with most of the Lower and middle is that they they hide income, claims fake expenses/deductions to claim Income Tax Refunds / Avoid Taxes etc, and nobody have a real intent of paying any taxes to the Govt for the nation building. EVERYONE IS PAYING or ends up paying because of the hard rules/enforcements or because they can not cheat the systems anymore. The love for the nation is only a showoff / for camera and not when its the time to pay taxes. The problem does not lie in who pays / does not pay tax, it lies in people misrepresenting their income and evading tax. If everyone actually disclosed whatever income they get (be it businesses, farmers, landlords, daily wage labourers, maids, politicians, etc) this 'eligible' % will also go up drastically. About 0.3% of indian population pays around 80% of the income tax revenue. it is not due to being poor or wealth inequality though. It is due to informal economy and appeasement of vote bank politics. In places like US, even a waiter pays tax. They assume 20% tip and waiter has to pay tax from his pocket if customer doesn't pay 20% tip.. where as in India a rich farmer earning in crores pays zero tax while getting crores in subsidy. The MPs and MLAs pocketing at least 60+ lakh in allowances every year. But it's all tax free. Despite many of them having crores of property. Until the political class pays it's due of income tax , the disparity shall remain. India’s GDP is hugely “underreported”. “MILLIONS” of business owners show their income as “FARM income” and do not pay a dime. Very huge transactions are still done in CASH/Black in real estate/Gold etc. Even a fresh IAS/IPS is worth at least 100 crores, then come the Netas- Do they pay full income tax ? I know crore-pati families who did not even have a bank account before demonetization. Why do you think 1 crore people became taxpayers overnight with in a year of demonetization? Basically the whole rural economy and unorganised sector is 'exempted'. There are small business and service owners who have crores in earnings and assets with zero tax. Schools and colleges who earn lakhs per kid, underpay teachers but setup through educational trusts for taxes. Anyone in public services - electricity to muncipal to water tanker to real estate registration to police - need a 'service charge or tip' to do what they are paid to do. They should analyse how many 'self employed' actually pay taxes. People who are interior designers, clothes designers, tutors, lawyers, doctors, CAs, auto drivers, car drivers, tea/ coffee stall operators etc. Many of these people own high end cars, live in 3 floor houses and work flexi hours. A very large percentage of earning population don’t declare their income and colluding tax officials don’t ever bother even finding out.Another large section is of SME owners using creative accounting to evade or mitigate tax impact. Farmers are burden on india, rich farmers demand free electricity, subsidy on furtilisers ,and compansation on failed crop etc, Yet they dont pay taxes, fake khlistani farmers are front runner in this shitshow. They have multiple tractors, thars and modified tractors with high quality sound system , yet they have audacity to demand MSP on farm produce so that they can stay rich and grab freebies. We need to tax farmers asap. The amendment aims to prevent high-income earners from excessively benefiting from tax-free interest on their EPF contributions. By introducing a threshold, it ensures that only moderate savers benefit from the tax-exempt status, promoting a fairer distribution of tax advantages. Taxing interest on EPF contributions above a certain threshold can enhance government revenue, which can be used for public welfare and development projects. This could potentially benefit society as a whole. The rule aligns with the general principle of taxation, where the government seeks to tax wealth and income in a progressive manner, ensuring that higher earners contribute a fairer share to the public coffers. Please understand that TDS deduction does not mean tax payment. If TDS (Tax Deducted at Source) is deducted on your income, including the interest from your EPF contributions, and your overall income tax liability after deductions is zero, you can claim a refund for the TDS amount that was deducted. In the new tax regime, **no income tax is payable upto the total income of Rs. 7 lakh** which is fair considering the low income tax payer base in India. As the income tax payer’s base increases the taxes can be lowered overall due to financial inclusion and formalisation. India, as a developing nation, requires substantial financial resources to fund infrastructure, education, healthcare, and other essential services. Taxation, including TDS on EPF interest, helps the government generate revenue necessary for these initiatives. By applying TDS to EPF interest, the government broadens the tax base, ensuring that a larger segment of the population contributes to national development. Taxation on interest income from EPF can help reduce income inequality by redistributing wealth. The revenue collected can be used for social welfare programs targeting lower-income groups. TDS simplifies the tax collection process for the government, reducing administrative costs associated with tax collection and enforcement. This is especially important in a developing country where resources may be limited. TDS on EPF interest diminishes the likelihood of tax evasion, as the tax is collected at the source, making it harder for individuals to underreport income. Many countries apply similar taxation on interest income to ensure comprehensive tax collection. Adopting such practices can help India align with global standards, making it easier to attract foreign investment and improve economic relations. In summary, the TDS deduction on EPF interest in a developing country like India is justified as it serves multiple purposes: it generates essential revenue for public welfare, promotes tax compliance, ensures equitable taxation, encourages savings, enhances administrative efficiency, and aligns with international practices. These factors collectively contribute to the overall economic development and stability of the nation, making TDS on EPF interest a necessary and beneficial policy. Tax burden on middle class reduced. Tax burden on the middle class has come down noticeably over the last 10 years. income tax exemption limit was raised from Rs 2 lakh to Rs 7 lakh, there has been a marked increase in the number of individuals filing zero income tax returns. Since the introduction of the new exemption limit in 2024, there has been a notable decline in the percentage of income tax collection from taxpayers earning less than Rs 10 lakh. The contribution of this group has decreased from 10.17% of the total tax paid in 2014 to just 6.22% in 2024. When we see the statistics, income tax paid by those earning between 2.5 lakh to 7 lakh in 2014, a decade back, it was Rs 25,000. Today, the tax liability is zero. In addition, the source said that people who have earning more than Rs 50 lakh stood at 1.85 lakh in 2014 and in 2024 it is 9.39 lakh, which is a rise of 391%. So as against an overall percentage increase of 120% in the overall income tax returns of individuals, the number of returns filed by people who are earning more than 50 lakh, the increase is 391%. This implies that as a percentage, the growth in the number of returns being filed by people above 50 lakh income has increased much more than the growth in overall returns. The tax liability on the lower or the middle income group has gone down, whereas the compliance and the tax liability of people who are earning more than 50 lakh has gone up. There has been a significant increase in the number of tax returns filed by people earning over Rs. 50 lakhs, owing to strict laws against tax evasion and black money introduced by the Modi government. In 2014, only 1.85 lakh individuals in this income bracket filed tax returns. By 2024, this number has jumped to 9.39 lakhs, marking an increase of over five times, Additionally, the income tax paid by those earning above Rs. 50 lakhs has also risen dramatically. In 2014, it was Rs 2.52 lakh crores, and by 2024 it has soared to Rs 9.62 lakh crores, which is a 3.2 times increase. Currently, 76% of the total income tax collected comes from this group of high earners, A comparison of tax burden at two different points should adjust the income levels for nominal growth in income. For example, the tax liability of a person in tax bracket of Rs 5-7.5 lakh a decade ago should be compared to a higher tax bracket of Rs 13-19 lakh, assuming the annual income growth is 10%. more  

Given the member antagonistic policies, for a good chunk of the contributors, it money lost for good, clearly proven by the huge corpus of unclaimed (actually unclaimable) funds in crores of inoperative accounts. more  

it may be true that higher salary people are dumping their earnings for tax free benefit. If we strictly see their % will be minimal. Most of these high salary brackets invest in other modes than this kind of fixed benefit. I wish to add a point here in line with the main post, the EPS payment is not increasing since inception, where as the corpus is growing. Could not understand why this retirement social security fund administrators are not thinking to provide benefit for the retired people after several years of contributions! more  

It is correct that EPFO is started for social security to service class by their own in the form of PF contribution and govt. provide tax benefit on intetest earned on your PF corpus. As we are aware govt. is declaring interest on higher side then what is current in market for secured investment. There is a huge burdon to govt. for this differencial interest. Govt. introduced this is a scheme is for retiement planning and not for other investment platform. It come to notice of govt. many high salary earner class dumping there investment in EPFO as Voluntery PF for tax free interest income. Therefore govt. kept this ceiling of Rs. 2.5 lakh by memeber contribution. As per this, if salary of person Basic+DA salary( other other allowance, which is more then 50% of CTC) is not more then Rs. 1,74,000 Per Month, PF @12% does not taxable as it does not exceed Rs.2.5 Lakhs ceiling. This is for check to high salary earner class who use EPFO and tax free, high return and secured investment platform and not as a social security option. more