According to the latest changes in EPFO rules, investors will now have to pay tax on interest on provident fund (PF) contributions starting April 1, 2022.
New Delhi: If you are an Employees’ Provident Fund Organisation (EPFO) subscriber, there’s an important piece of news for you. According to the latest changes in the rules, investors will now have to pay tax on interest on provident fund (PF) contributions starting April 1.
Here are the 5 important things subscribers should know about new EPF rules:
Read more: PF account holders alert! New rules to come from April 1; Know details
1. Not all subscribers will be affected by the new rule.
2. According to new rules, investors saving more than Rs 2.5 lakh annually will have to pay tax on the interest on PF savings.
3. All the interest credited to the PF account by employees will be tax-free if the contributions are not more than Rs 2.5 lakh in a year.
4. According to experts, the new rule change will impact mostly high-income earners who have a higher PF deduction.
5. Prior to Budget 2021, interest on EPF was totally tax-free, meaning that investors could save as much as they want in PF schemes without giving two hoots about the taxes involved.
Read more: Operational guidelines for taxing EPF issued
6. In case, if employers do not contribute to their PF account, subscribers will have to pay taxes on interest on savings of more than Rs 5 lakh per year.
7. The tax on interest on PF accounts will be taxable every year the savings cross the Rs 2.5 lakh mark.
8. To bring the new change into effect, the Central Board of Direct Taxes (CBDT) has added a new section 9D to the IT rules.
9. To make it easier for calculating the taxes on EPF saving, two separate accounts will be created within existing PF accounts.
10. One account will have savings up to Rs 2.5 lakh while the other will have investments above Rs 2.5 lakh.
