Industry & Economy
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Income Tax
Panel on EET system of taxation submits report
K.R. Srivats
New Delhi
,
Nov. 28
THE Government-appointed Committee of Experts, to work out a roadmap for moving towards an Exempt-Exempt-Taxable (EET) system of taxation of savings, submitted its report to the Union Finance Minister, Mr P. Chidambaram, here today.
While the committee members remained tight-lipped about the recommendations, informed sources said that the recommendations have been made with the objective of improving the long-term savings of people so that they could lead a comfortable post-retirement life.
The committee, which is to have initially submitted its report by October 31, is understood to have taken care of the interests of the low-income and middle-income groups in its recommendations. Sources said that the committee has sought to encourage accumulation of savings by such groups.
Under the EET system, the contributions and accumulations in savings instruments are tax-exempt, but the withdrawals are taxed as ordinary income.
Indications are that the EET-panel has suggested that schemes such as the public provident fund (PPF) should be "grandfathered" and only new investments should be part of the EET system.
The Finance Minister had in his Budget speech 2005-06 announced the decision of the Government to adopt an EET method of taxation of savings in accordance with the best international practices.
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