The Economic Survey 2015-16 has pitched for implementation of exempt, exempt, tax (EET) status in 80C instruments like ELSS, PPF and others.
Simply put, the survey has advocated levying tax under 80C instruments on maturity. The survey pointed out that the incentives are availed mostly by the well-off on instruments like PPF.
The survey has said, "India should move in a phased manner to the EET method of taxation of savings. Interestingly, the New Pension Scheme (NPS) is already being subjected to the EET method of taxation. Therefore, deductions under Section 80C and 80CCD should be reassessed to move towards a common EET principle for tax savings.”
"While there should be no tax incentive for savings, the question is what should be the tax treatment of savings so as to eliminate the inherent bias under income tax. The emerging wisdom is that savings should be taxed only at the point of contribution (TEE) or withdrawal (EET); the latter being the best international practice on several counts," the survey said.
