The government has started taxing the interest earned on PF contribution from April 1 this year. For this PF will be divided into 2 different parts. PF is a social security program run by the government.
New Delhi. Known as Employees’ Provident Fund or PF, it is a long-term savings and investment account created by the contribution of the district employee, employer and in some cases the government. It is a social security program run by the Employees’ Provident Fund Organization (EPFO). It ensures the financial security of the employees after retirement. The amount deposited over the years in the PF account along with interest is paid to the employee on his retirement.
PF is generally seen as a retirement fund. No one thinks of withdrawing money from this fund before retirement. PF can be withdrawn by the beneficiary after retirement or in the event of your death before retirement. However, under certain circumstances, you can also withdraw money from PF before retirement.
Pre-retirement withdrawal
Actually, there are already options to withdraw money from PF before retirement, but in view of the Kovid-19 epidemic, the government had given some more relief to the people in this regard. According to the new rules, employees can withdraw 75 percent of their basic pay or net balance in PF account for 3 months. For this, you can apply online, the process of which is completed in 3 business days. Apart from this, you can withdraw money from PF by giving the reason for the housing loan. For this you must have employment for 60 months. You can withdraw money from PF even if you do not have employment for 2 consecutive months. Apart from this, you can withdraw money from PF for the marriage of yourself, children and siblings or for the education of children after 10th. However, this claim will be valid only if you have completed 84 months of working. Also, one can withdraw 90 percent of PF amount before one year of retirement.
What is the new income tax rule related to PF
The government has started charging tax on interest earned on PF from April 1 this year. According to the new income tax rules, if an employee’s PF contribution in a financial year exceeds Rs 2.5 lakh, then he will have to pay tax on the interest received. From April 1, PF accounts will be divided into taxable and non-taxable parts. The Center had issued new income tax rules on August 2021.
