In the financial year 2021-22, more than Rs 2.5 lakh is deposited in your EPF account. So the interest earned on the additional amount will be taxable. The rest of the amount will be deposited in the taxable account for calculation on this.
Your retirement savings in provident fund may now come under tax net. Recently, EPF has issued new rules for this. According to which if your contribution in a financial year is more than 2.5 lakh rupees. So the interest earned on it will come under the purview of tax. In fact, Finance Minister Nirmala Sitharaman had announced in Budget 2021 that, now the interest received on the amount deposited in the EPF account in a year more than Rs 2.5 lakh will come under the purview of tax. After which the Central Board of Direct Taxes (CBDT) has issued a circular of the new rule. In which all the information related to it has been given. Let us know how it will affect you?
Effect of new rules of EPF – Finance Act 2021 has been added to EPF. In which it has been said that, if an employee makes more than Rs 2.5 lakh contribution in his provident fund in a financial year. So the interest earned on the amount above Rs 2.5 lakh will have to be taxed. At the same time, such employees who do not have any contribution of the company in the provident fund. So for them this limit will increase from Rs 2.5 lakh to Rs 5 lakh. Along with this, this limit will also be Rs 5 lakh for central employees.
According to the new rules, now two accounts will be created in the Provident Fund. First- taxable account and second- non-taxable account. CBDT notified Rule 9D for this, which will calculate tax on interest earned on provident fund contribution. The new Rule 9D explains how the taxable interest will be calculated. Also how to manage two accounts and what companies will have to do.
Non Taxable Account – If Rs 5 lakh is deposited in one’s EPF account. So according to the new rule, there will be no tax on the amount deposited till 31 March 2021.
Taxable Account – In the financial year 2021-22, more than Rs 2.5 lakh is deposited in your EPF account. So the interest earned on the additional amount will be taxable. The rest of the amount will be deposited in the taxable account for calculation on this.
