PF Account News Update: Announcement was made in the budget regarding tax on interest received on EPF. But it was not clear how this tax would be levied. Now the Income Tax Department has cleared the picture regarding tax by issuing a notification on this.
New Delhi: PF Account News Update: There is very important news for the employed people. There has been a big change in the rules of Employees’ Provident Fund (EPF). If a person’s contribution to EPF is more than Rs 2.5 lakh in a financial year, then he will have to maintain two separate PF accounts from this financial year 2021-22. The Central Board of Direct Taxes (CBDT) has also issued a notification regarding this.
Now you have to keep PF account
According to the notification, the existing provident fund accounts (PF accounts) will be divided into two separate accounts. A separate PF account will be opened to calculate the tax on interest earned on the amount deposited in the PF account. According to the notification of CBDT, no tax will be payable on any contribution till March 31, 2021, but after the financial year 2020-21, interest on PF accounts will be taxable, which will be calculated separately.
Rules will be applicable from 1st April 2022
According to the CBDT, these rules will be effective from 1 April 2022. In the financial year 2021-22, if more than Rs 2.5 lakh has been deposited in your PF account, then you will have to pay tax on the interest received on that additional amount. You will also have to tell this information in the income tax return filing of the next year. If there is no employer contribution in the account of a person, then this limit will be Rs 5 lakh for him.
Separate limit for private-government employees
One important thing to remember is that this limit of Rs 2.5 lakh per year is only for the employees working in private companies and not for government employees. If you are a government employee, then the limit of contribution to EPF and VPF is Rs 5 lakh instead of 2.5 lakh. Meaning if more than five lakh rupees is deposited annually in the EPF and VPF account of a government employee, then they will have to pay tax on that extra amount.
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