If you deposit more than 2.5 lakh PF in a year, you will have to pay tax, know the complete information


A juggernaut to save taxes is over. Use it High Employees earning income have been doing. Really, Budget In 2021, there is a provision to set a tax exemption limit for interest earned on Employees Provident Fund and Voluntary Provident Fund. This means that interest earned on provident fund contributions above Rs 2.5 lakh per annum will now be taxed at normal rates. This will only apply to employee contributions. Not on the company’s Yodgan.

High-income salaried employees will be affected

Under the existing provisions, the interest of Employees Provident Fund, Voluntary Provident Fund and Freedom Fund Trust is exempted from tax irrespective of the contribution of PF. doing. Under the EPF Act, employees and employee contributions (company contributions) are fixed at 12% of salary. However, employees can contribute more than this amount to the Voluntary Provident Fund (VPF). VPF Has no upper limit for contributions.

Benefit of full interest discount without any limit

Prakash Hegde, a chartered accountant in Bengaluru, said some employees contribute a large amount to the provident fund. And take advantage of interest rebates on the entire interest without any limit. In the budget proposal, the finance minister contributes up to Rs 2.5 lakh in just one year on the interest of PF, offering at a discount. ‘The new limit will apply to contributions made on or after April 1, 2021. Employee Provident The move will affect employees less than 1 percent of the fund.

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