StaffCorner

16 Jul, 2022 10:49a.m.

Changes in the IT exemptions on PF - 10 Points

changes-in-the-it-exemptions-on-pf-10-points

The Employee Provident Fund (EPF) is among millions of employees' most important financial planning and retirement investment choices.

With assured returns and tax benefits, EPF is the go-to investment for most. Under the Exempt, Exempt, Exempt scheme (EEE,) tax exemptions were also available on contributions made to the fund and towards withdrawals from accruals.

But the government had brought amendments to the tax benefits available to employers and employees for contributions to the EPF. From April 1, 2022, provident fund accounts have been divided into taxable and non-taxable accounts. 

Under Budget 2021, the government has decided to reduce the tax benefits to target high-income earners who benefit from the EEE scheme. 

Here are the ten points that you need to know about EPF:

  1. The EPFO has reduced the interest rate to a four-decade low of 8.1 per cent for FY 2021-22. 
  2. Any interest on contributions made towards EPF of an employee only remains tax-free for contributions of up to ₹ 2.5 lakh a year. 
  3. Interest on contributions of over ₹ 2.5 lakh is taxed from the employee yearly. 
  4. The contribution threshold is increased to ₹ 5 lakh if an employer is not contributing towards the EPF of an employee. 
  5. Only the excess contribution above the threshold is taxed, not the total contribution itself. 
  6. The excess contributions and interest accrued on it will be maintained in a separate account with the EPFO. 
  7. Employer's contribution to Provident Fund (PF), NPS and superannuation aggregating to a total sum of ₹ 7.5 lakh a year is exempt from taxes. 
  8. Since employers will withhold taxes based on accruals, these details must be filled in Form 16 and Form 12BA. 
  9. Employers must mandatorily provide EPF contributions for employees whose monthly income is up to ₹ 15,000. 
  10. Taxes withheld in such a manner need to be reported by employees as "Income from other sources."

 




Whatsapp Share Button

⌂ Go to StaffCorner.com Home Page



Latest in Important News
Latest in Other News Sections


StaffCorner brings you the latest authentic Central Government Employees News.
About us | Privacy Policy | Terms and Conditions | Archives