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Indian budget 2016 has one change to Employee Provident Fund. As per the news it says

It is only the interest on contributions made after April 1, 2016 which will be taxed

The same is said in this news.

However some article online suggest that this may cause individual who is 25 year old currently may loose as much as 18% of his/her PF corpus by his retirement. Specifically check this image: enter image description here on this page.

In right most column, second cell from top, it ends up saying individuals with current age 25 years will lose upto 20% of saving under tax.

  • Are these calculations correct?

I feel that all these news of loosing 20% of PF corpus under tax have calculated tax on 60% of full corpus, but not on interest on 60% of full corpus. But then many news say that we will be loosing 20% of total corpus.

  • What is correct?
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Are these calculations correct?

These are approximate calculations and are with the assumption that entire corpus will be taxed. The assumption was valid as the wording in the budget speech was not very clear.

Subsequently the finance ministry has clarified that only interest generated will be taxed and not the contribution. There are no new calculations done with this assumption.

Edit: As per communication from finance ministry this proposal is on hold.

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