Now that EET (Exempt, Exempt, Tax) Scheme is expected to be applied even for public provident funds, I am apprehensive of being subjected to tax on withdrawal of the considerable amount of fund to my credit in my PPF account. Do you advise me not to renew my account on its maturity during this calendar year to avoid the consequences of the new scheme expected to come into force from April 1, 2011.
EET Scheme, if and when introduced, can apply only to those contributions which are allowed as a deduction from income under a scheme from the date on which such scheme becomes effective. As for the present contributions to PPF scheme, only rebate was allowed under Sec. 88 earlier and relief by way of deduction is being allowed under Sec. 80C. It is not a deduction from income under the EET (Exempt, Exempt, Tax) scheme. If and when it is introduced, there can be tax liability on withdrawal only for the contributions made after the date on which the new scheme/ law comes into effect. There is no need for any apprehension in this regard. Only the conditions in force at the time of deposit can be applicable.
