New Delhi: The tax rules of EPFO have been changed. According to the information, if you contribute more than Rs 2.5 lakh per year to the Employees’ Provident Fund (EPF), the income from it will start being taxed.
Regarding your information, let us tell you that in the Union Budget 2021, the government has announced that it will start getting the benefit of tax benefits for the high income people who are going to benefit from the EEE (Exempt-Exempt-Exempt) scheme.
EEE tax scheme will benefit
EEE or exempt-exempt-exempt tax category seeks to make all investments falling under the category completely tax free. EEE grouped investments are governed by various sections of the Income Tax Act of 1961. Here exemption-exempt-exempt means that the investment amount, interest received and maturity amount are getting ready to make all three things free.
Here, there is a discount of up to 5 lakhs
If the employer has not contributed towards EPF, then high income earners can take the benefit after claiming exemption on contribution up to Rs 5 lakh in their EPF. The Central Board of Direct Taxes (CBDT) incorporated Rule 9 of the Income Tax Rules, 1962 in the financial year 2021-22 to implement this announcement.
Know, information about the taxation system
Experts say that according to this rule, an EPFO subscriber with a contribution of more than Rs 2.5 lakh in a financial year is going to have two EPF or PF accounts, where PF contribution of Rs 2.50 lakh is going to be deposited in one account. .
Whereas an amount above Rs 2.5 lakh is given to another. Hence, the interest earned in the EPF/PF-1 account is going to be exempt from tax. But the interest earned in PF / EPF-2 account will be taxed. This means that the excess contribution of the employee is not taxed.
Have to invest more in equity
The EPFO starts getting approvals this month for a proposal to increase its equity exposure to 20 per cent from the current 15 per cent limit. The proposal is expected to be considered and approved for the meeting of EPFO trustees to be held on July 29 and 30.
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