Employee’s contribution to PF will be reduced to 10%. Will it increase the tax burden?

The Finance Minister recently said that the employee’s contribution to PF will be reduced from 12% to 10%. Will it not increase our tax burden since PF is non-taxable? Also, is it to be done by choice of the employee or is it compulsory?
Jayant R. Pai CFP and Head - Products, PPFAS, Mutual Fund replies: The reduction in contribution will lead to an increase in your takehome pay which, in turn, will be taxed at your income-tax slab rate. This reduction has to be undertaken by all companies falling within the ambit of EPF. As far as I am aware, employees too will have to mandatorily opt-in for this reduction.

My wife and I bring home around Rs 1.2 lakh per month. My wife’s income doesn’t fall in any tax bracket. We are planning to buy a budget home in her name under the Pradhan Mantri Awas Yojana (PMAY) scheme. We will be taking a loan of Rs 15 lakh. Can I show the housing loan interest in my tax return?
Homi Mistry Partner, Deloitte Haskins & Sells replies: If the house is co-owned by both of you and you will repay the loan jointly with your wife, the interest on housing loan can be claimed in the tax return by you and your wife in the ratio in which you both will repay the loan instalments. However, if the house is owned by your wife only and she will pay the loan instalments, the interest on housing loan cannot be claimed in your return. Moreover, if your wife owns the house while you have financed the property including the loan instalments, the income from house property will be clubbed in your hands and the applicable deduction for the interest on housing loan will be allowed to you against the clubbed income.

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