A roadmap towards a streamlined tax structure applying to all of India's savings instruments will be introduced next month, according to the head of the committee tasked with examining the issue.
The committee, headed by R. Kannan of SBI Life Insurance, was appointed by Finance Minister P. Chidambaram. Its objective is to define ways of bringing uniformity to the tax treatment of all savings schemes according to the ‘exempt-exempt-taxed’ (EET) model, as proposed in the last Budget.
The premise behind the EET model is to exempt savings from tax at the contribution and accumulation stages, but tax them at the withdrawal stage.
“We are looking at 90 short-term and all long-term saving instruments, including provident funds," Kannan was quoted in the Indian media as stating.
"We have to see which instrument comes directly under the EET category and whether it is possible and feasible to bring the others under the same category within the next four to five years,” he added.
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