financial stress on the demise of an earning member. Therefore, there is a need to review this tax deduction vis-à-vis various investment/expense options that are currently covered.
Another point that merits attention is that different instruments under this provision have different overall tax treatment. For example, PF schemes work on the Exempt-Exempt-Exempt principle, i.e., investment is eligible for tax deduction, interest earned is tax-exempt, and the maturity amount is not taxed. On the contrary, though investment made in specified bank deposits is eligible for tax deduction, the interest earned is taxable, which leaves little net of tax interest income with There is a need to review various instruments from their tax treatment angle as well.
The writer is partner, KPMG in India