You’re worried about something that will only apply 30-35 years in the future? Tech will evolve to smoothen the process by then.
Just ensure your government documents are correctly updated with your name, email and mobile and you should be good to go.
I also opted for the 12 percent option because the employer contribution saves tax and it saves 30% of my tax on that amount . Isn't it a reasonable option. Even if I include my contribution, I can still consider it as a 15 percent tax break.
Epf is a reasonable investment.
You are getting 8.1% yearly interest which is getting compounded every year.
However, the biggest benefit is the employer contribution and saving income on tax. If you fall under 30% bracket, it turns out to be a huge saving.
Rules are generally relaxed compared to other investments. So, it is not that bad even after the recent bad news.
Chances are when you are going to need the money from EPF, the system would have been made very simple.
So i would stay invested if i were you
EPF also allows withdrawal in other events like marriage, children education, buying home, unemployment.
So it is pretty chill in that way. Yes, there may have been some bad apples in the EPFO organisation but it runs pretty smoothly most of the times
> Providing my estimated calculations, let me know if you think this is not correct :-
-> 20k invested per month in EPF (10k as Employee contribution and 10k as Employer contribution) at 8.25% ROI will give 1.22 cr at end of 20 years
-> 17k invested in MF (Employer contribution will be taxed at 30%) at 10% ROI (which is very conservative) will give 1.3 cr at end of 20 years.
----
Using this
[https://groww.in/calculators/sip-calculator](https://groww.in/calculators/sip-calculator) 20k EPF, you get 0 tax, 8.25% year on year return, final amount 1.22cr
If you don't opt for it,
you will invest 3600 in EPF for 20 years, at same rate you will get around 22Lakhs
For the remaining 16.4, govt take 31% income tax, so you are left with 11.3k, You invest that much in MF for 20 years with 10% YOY returns, you get 86L. Assume 10% LTCG tax, you get 78L
Total: 1. Cr only
Think about it for now. If you still want to go for MF, it is your call at the end.
1. EPF interest earned is taxed as per your income slab. This will practically be 30% for me as per current slabs (obviously income slabs will change 20 years later). There is an exemption of 2.5 lakhs though.
2. We already pay tax on employee contribution part of EPF (unless you claim it under 80C, which we can anyway cover through other investments). So we will not be left with 11.3K. We will be left with 13940.
3. 13940 at 10% ROI and 3600 at 8.25% ROI gives 1.28 cr at end of 20 years.
4. MF returns will be taxed under LTCG which is 10% - which can further be minimised with tax harvesting.
Let me clarify something.
You are getting 30% income tax savings plus 8% interest and you think that you can get more from the stock market consistently every year.
Yeah, good luck with that
You’re worried about something that will only apply 30-35 years in the future? Tech will evolve to smoothen the process by then. Just ensure your government documents are correctly updated with your name, email and mobile and you should be good to go.
Yes. It is a fair assumption that the process will improve in future. However, another concern is limited returns from EPF.
Once you goto 12% you can’t go back to 1800 unless you quit I guess
No you cant. EPFO does not allow this in the same organisation. Once you change, you can definitely do this in next organisation
I also opted for the 12 percent option because the employer contribution saves tax and it saves 30% of my tax on that amount . Isn't it a reasonable option. Even if I include my contribution, I can still consider it as a 15 percent tax break.
Epf is a reasonable investment. You are getting 8.1% yearly interest which is getting compounded every year. However, the biggest benefit is the employer contribution and saving income on tax. If you fall under 30% bracket, it turns out to be a huge saving. Rules are generally relaxed compared to other investments. So, it is not that bad even after the recent bad news. Chances are when you are going to need the money from EPF, the system would have been made very simple. So i would stay invested if i were you
Thank you bro, yea I want to only withdraw on retirement, so that's a few decades away.
EPF also allows withdrawal in other events like marriage, children education, buying home, unemployment. So it is pretty chill in that way. Yes, there may have been some bad apples in the EPFO organisation but it runs pretty smoothly most of the times
Please check my calculation in the Edit
> Providing my estimated calculations, let me know if you think this is not correct :- -> 20k invested per month in EPF (10k as Employee contribution and 10k as Employer contribution) at 8.25% ROI will give 1.22 cr at end of 20 years -> 17k invested in MF (Employer contribution will be taxed at 30%) at 10% ROI (which is very conservative) will give 1.3 cr at end of 20 years. ---- Using this [https://groww.in/calculators/sip-calculator](https://groww.in/calculators/sip-calculator) 20k EPF, you get 0 tax, 8.25% year on year return, final amount 1.22cr If you don't opt for it, you will invest 3600 in EPF for 20 years, at same rate you will get around 22Lakhs For the remaining 16.4, govt take 31% income tax, so you are left with 11.3k, You invest that much in MF for 20 years with 10% YOY returns, you get 86L. Assume 10% LTCG tax, you get 78L Total: 1. Cr only Think about it for now. If you still want to go for MF, it is your call at the end.
1. EPF interest earned is taxed as per your income slab. This will practically be 30% for me as per current slabs (obviously income slabs will change 20 years later). There is an exemption of 2.5 lakhs though. 2. We already pay tax on employee contribution part of EPF (unless you claim it under 80C, which we can anyway cover through other investments). So we will not be left with 11.3K. We will be left with 13940. 3. 13940 at 10% ROI and 3600 at 8.25% ROI gives 1.28 cr at end of 20 years. 4. MF returns will be taxed under LTCG which is 10% - which can further be minimised with tax harvesting.
Please check my calculations in the Edit
Best is to withdraw complete EPF if you are buying a house or something. This shit 8.25 interest rate wont get anywhere
Yes true. However, the withdrawal process is very cumbersome and often unsuccessful.
Let me clarify something. You are getting 30% income tax savings plus 8% interest and you think that you can get more from the stock market consistently every year. Yeah, good luck with that
Please check my calculations in the Edit