Govt notifies guidelines for curiosity on PF contribution: How it is going to be calculated

The Central Board of Direct Taxes (CBDT) not too long ago notified Income Tax guidelines wherein curiosity revenue accrued within the provident fund (PF) of an individual above a specified restrict might be taxed. The rule might be relevant to these making contributions of greater than ₹2.5 lakh a 12 months.

According to the CBDT, the prevailing PF accounts might be break up into two separate accounts so as to operationalise the brand new rule. It mentioned that separate accounts throughout the PF account shall be maintained.

“For the aim of calculation of taxable curiosity…, separate accounts throughout the provident fund account shall be maintained through the earlier 12 months 2021-2022 and all subsequent earlier years for taxable contribution and non-taxable contribution made by an individual,” based on the Income-Tax (twenty fifth Amendment) Rules, 2021.

As per the brand new guidelines, non-taxable PF contribution to comprise closing stability in account as of March 31, 2021 and contribution made by particular person in account in 2021-22 and former years, which isn’t included in taxable contribution account, inside threshold and curiosity accrued on these.

The quantity deposited above the desired threshold might be within the taxable contribution account and the pursuits paid on it would get taxed.

These new guidelines will come into power April 1, 2022. 

As per authorities estimates, about 1,23,000 excessive revenue earners are making greater than ₹50 lakh a 12 months in tax free curiosity on common from their provident fund accounts, Mint had reported on 4 February quoting a authorities official.

Meanwhile, retirement fund physique EPFO recorded web new enrolments of 12.83 lakh in June, giving an employment perspective within the nation.

The provisional payroll knowledge of EPFO (Employees’ Provident Fund Organization) launched on Friday highlights a rising pattern with 12.83 lakh web payroll additions throughout June 2021, a labour ministry assertion mentioned.

The influence of second wave of COVID-19 waned throughout June, resulting in great progress in web payroll additions as in comparison with April and May, it mentioned.

Subscribe to Mint Newsletters * Enter a legitimate electronic mail * Thank you for subscribing to our e-newsletter.

Never miss a narrative! Stay related and knowledgeable with Mint.
Download
our App Now!!