EPF contribution of over Rs 2.5 lakh now requires 2 PF accounts

Individuals with Workers’ Provident Fund and Voluntary Provident Fund (VPF) contribution of over Rs 2.5 lakh per monetary 12 months will now have two separate PF accounts.

Finance Minister Nirmala Sitharaman had introduced, on this 12 months’s finances, that PF contribution of greater than Rs 2.5 lakh in a fiscal will likely be taxable. According to the choice, lately, the Central Board of Direct Taxes (CBDT) notified the foundations for taxation of the curiosity on the surplus EPF contributions.

“For the aim of calculation of taxable curiosity underneath sub-rule (1), separate accounts inside the provident fund account shall be maintained throughout the earlier 12 months 2021-2022 and all subsequent earlier years for taxable contribution and non-taxable contribution made by an individual,” it mentioned.

What this implies is that until FY22, all contributions made in PF accounts to date, together with contribution of upto Rs 2.5 lakh made in FY22, will likely be positioned in a single account the place no tax will likely be levied as has been the follow with the PF, the place contribution, curiosity, and withdrawal, all are tax free.

However one other PF account will likely be opened for every subscriber in FY22, the place contribution of over Rs 2.5 lakh made within the present 12 months and subsequent years will likely be positioned. This may taxable account which means curiosity earned on this contribution can be topic to relevant tax.

These guidelines will likely be efficient from April 1, 2022.

Tax specialists are of the view that the notification has ended the ambiguities within the matter and supply comfort of calculation of curiosity.

–IANS

rrb/sn/vd

(Solely the headline and movie of this report could have been reworked by the Enterprise Commonplace employees; the remainder of the content material is auto-generated from a syndicated feed.)

Expensive Reader,

Enterprise Commonplace has all the time strived arduous to supply up-to-date data and commentary on developments which are of curiosity to you and have wider political and financial implications for the nation and the world. Your encouragement and fixed suggestions on the best way to enhance our providing have solely made our resolve and dedication to those beliefs stronger. Even throughout these troublesome instances arising out of Covid-19, we proceed to stay dedicated to protecting you knowledgeable and up to date with credible information, authoritative views and incisive commentary on topical problems with relevance.

We, nonetheless, have a request.

As we battle the financial impression of the pandemic, we’d like your assist much more, in order that we are able to proceed to give you extra high quality content material. Our subscription mannequin has seen an encouraging response from lots of you, who’ve subscribed to our on-line content material. Extra subscription to our on-line content material can solely assist us obtain the objectives of providing you even higher and extra related content material. We imagine in free, truthful and credible journalism. Your assist by way of extra subscriptions may also help us practise the journalism to which we’re dedicated.

Help high quality journalism and subscribe to Enterprise Commonplace.

Digital Editor