One of the Major Relief for Taxpayers in the Budget 2007-2008

According to Subhash Lakhotia's view on the current budget, he mentioned that the special feature of the budget is FM is not considered the EET which give the taxpayers a relief for another one year. (Subhash Lakhotia is a New Delhi based tax investment consultant)

What is this EET ? In what sense it will affect Tax Payers..!?

Normally we used to do taxsavings in the form of PPF,GPF and NSC and much more. Here comes the terms EEE and EET .

Say suppose you are investing Rs 70,000 in PPF(which is the upper limit for this instrument under sec 80C of IT ACT). At the time of contribution in a particular year the amount contributed is exempted from Tax. This is the First E. The accumulated interest on this amount is also exempted from Tax and this is the Second E. When you are withdrawing the amount (after the 15 year Lock-in Period for the PPF) that is also Exempted from the Tax on that particular year. So the savings under 80C instruments are now availing the EEE Benefits.

In the previous budget our FM outlined that this EEE will be turned to EET in future. If it does so, all the withdrawal made from 80C instruments will be fall under taxable income that is the last E(xempt) will turned to T(axable). Basic idea of EET structure is to recommending a long term investing.

But FM does not mentions anything about that in his current budget.. We have one more year to enjoy the benefits of EEE.


Further readings

http://in.rediff.com/getahead/2006/feb/20ppf.htm
http://economictimes.indiatimes.com/articleshow/1378923.cms