Simply Save | Know the taxation rules for interest earned on EPF contribution of over Rs 2.5 lakh
CBDT has prescribed two accounts - for taxable and non-taxable contributions - within your PF account. For more insights, tune into the podcast
September 07, 2021 / 07:21 PM IST
In Union Budget 2021, Finance Minister Nirmala Sitharaman proposed to tax interest earned on employees' own provident fund contribution of over Rs 2.5 lakh financial year 2021-22 onwards. For some employees, primarily government employees, the limit is higher at Rs 5 lakh. Now, government estimates suggest less than 1 percent of employees provident fund (EPF) subscribers, primarily high-earners, will be affected. However, even those who voluntarily contribute higher-than-mandated amounts to benefit from attractive, secure interest rates might need to re-evaluate their retirement planning strategy.
While the announcement was made in July, so far, the implementation norms had not been framed. The Central Board of Direct Taxes has now notified rules on how your taxable employees' provident fund contribution will be treated in your PF account. It has prescribed two separate accounts - for taxable and non-taxable contributions - within your PF account. To understand the implications for salaried individuals, tune into Simply Save.