Top 20 HNIs have Rs 825 crore in EPF!

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Did you know that the Top 20 HNI account holders have about Rs 825 crore in their EPF accounts. And that one of the highest contributors has more than Rs 103 crore in his EPF account followed by two HNIs who have more than Rs 86 crore each in the PF accounts.

I came across few interesting data points about HNI (high networth individuals) and their EPF accounts in these two articles on popular business dailies (link here and here) and thought I will share it here.

Here are a few of them:

  • Top 20 HNIs have about Rs 825 crore in their EPF accounts.
  • Top 200 HNIs have over Rs 2000 crore in their EPF accounts.
  • The HNIs make up about 0.27% of the total 4.5 crore Employees’ Provident Fund account holders, i.e. about 1.2 lakh HNIs hold EPF accounts.
  • The average PF corpus for HNIs is Rs 5.92 crore each. This translates to average annual earnings of Rs 50 lakh per person a year in tax-free EPF interest!
  • One of the highest contributors has more than Rs 103 crore in his EPF account followed by two HNIs who have more than Rs 86 crore each in the PF accounts.
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The Budget 2021 has made interest earned on employee contribution in excess of Rs 2.5 lakh to EPF taxable in a financial year. The employers’ contribution is not taken into account for this Rs 2.5 lakh threshold calculations.

To find out your EPF corpus, you can use this excel EPF calculator. Also, check historical EPF interest rates to see how EPF interest rates have changed over the years.

As per this article (link), If someone’s current basic salary is up to Rs 1.73 lakh per month and there are no contributions to VPF, then there is no need to worry about the new tax on EPF interest. This is because mandatory EPF contribution is 12% of basic salary. Therefore (12% of Rs 1.73 lakh) x 12 months = Rs 2.5 lakh which is the new contribution limit above which interest on the EPF contribution every year will become taxable. Majority of the Indian salaried class with current salary below this level will not be impacted by this tax at present.

The idea about making this change was that the government wants to fix the anomaly of paying such huge tax-free interest to HNIs. This change will prevent High Networth Individuals from depositing large sums in EPF to earn an assured and tax exempt returns.

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Seemingly, its not just about the unfairness in paying huge sums in assured tax-free interest to high-income earners but also an indication that the interest liability on EPF is increasingly becoming unsustainable with each passing year. As per the government, it is reiterated that “since any tax exemption is provided through taxpayers’ money, it was unfair to allow a small group of HNIs to misuse a welfare facility.”

Related reading: Should you still invest more than Rs 2.5 lakh in EPF?

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Dev Ashish

Dev Ashish

A SEBI Registered Advisor and founder of Stable Investor, Dev Ashish is helping people achieve their Financial Goals & Invest profitably.
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