Posts Tagged ‘Tax



Now that I’ve started working and my salary falls in the taxable bracket, was just trying to figure out what each PF, EPF and PPF mean and what are the benefits of each of these.


The Employee Provident Fund, or provident fund as it is normally referred to, is a retirement benefit scheme that is available to salaried employees.

Under this scheme, a stipulated amount (currently 12%) is deducted from the employee’s salary and contributed towards the fund. This amount is decided by the government.

The employer also contributes an equal amount to the fund.

However, an employee can contribute more than the stipulated amount if the scheme allows for it. So, let’s say the employee decides 15% must be deducted towards the EPF. In this case, the employer is not obligated to pay any contribution over and above the amount as stipulated, which is 12%.

Return on Investment: 8.5% per annum

The amount accumulated in the PF is paid at the time of retirement or resignation. Or, it can be transferred from one company to the other if one changes jobs.

In case of the death of the employee, the accumulated balance is paid to the legal heir.


The Public Provident Fund has been established by the central government. You can voluntarily decide to open one. You need not be a salaried individual, you could be a consultant, a freelancer or even working on a contract basis. You can also open this account if you are not earning.

Any individual can open a PPF account in any nationalised bank or its branches that handle PPF accounts. You can also open it at the head post office or certain select post offices.

The minimum amount to be deposited in this account is Rs 500 per year. The maximum amount you can deposit every year is Rs 70,000.

Return on Investment: 8% per annum

The accumulated sum is repayable after 15 years.

The entire balance can be withdrawn on maturity, that is, after 15 years of the close of the financial year in which you opened the account.

And the most important part! Tax Impact


The amount you invest is eligible for deduction under the Rs 1,00,000 limit of Section 80C.

If you have worked continuously for a period of five years, the withdrawal of PF is not taxed.

If you have not worked for at least five years, but the PF has been transferred to the new employer, then too it is not taxed.

The tenure of employment with the new employer is included in computing the total of five years.

If you withdraw it before completion of five years, it is taxed.

But if your employment is terminated due to ill-health, the PF withdrawal is not taxed.


The amount you invest is eligible for deduction under the Rs 1,00,000 limit of Section 80C.

On maturity, you pay absolutely no tax.

All this gyaan borrowed from here


Highest Tax Rates

Once my teacher in 10th standard posed this question to me

Guess whats the highest tax rate Indians have paid? and the answer to it was (as far as I remember) in the range of 90-95% which made me (like everone else) wonder why would you earn in the first place?

This question got triggered when I met this guy (think from Sweden) during an exchange programme where I was told that taxes are as high as 40% BUT the difference is the government pays for all the education expenses.

These incidents trigger two questions

1. What are the highest tax rates in the world?

2. Why should we have such high tax rates?

The answer to the first question could be found out thru a simple wiki

Some countries like Angola, Benin, Denmark, Sweden have tax rates as high as 60%. There are several other countries like Belgium, Cuba, Gabon etc… which have tax rates at about 50% which means 50% of the salary you earn… is taken away by the government.

This is a tricky situation. If government can pay for all my basic necessities and cut equivalent tax… Then I would prefer shirking (unless I am very ambitious).

So what’s this blog about?

Another attempt? Well yes. Attempting to figure out another sustainable model (there are some other attempts going on parallel-ly). Well, we have a lot of questions in mind. we read up stuff, we do some research to find answers to these questions. This is an attempt to publish that little 15-20 minute research.
July 2018
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