In the Union Budget 2021, the Salary class has received another setback. Now if you get more PF deducted then you may have to pay tax.
In the Union Budget 2021, the Salary class has received another setback. Now if you get more PF deducted then you may have to pay tax. Yes, Finance Minister Nirmala Sitharaman has imposed a cap on PF deduction in the budget presented on Monday. PF deduction above Rs 2.5 lakh will attract Income Tax.
Under Clauses 10 and 11 of the Provident Funds Act, 1925 (19 of 1925), interest on EPF is completely tax free. According to the government, it has been seen that some employees get more PF deductions and they are getting good interest. Voluntary PF cuts are more among those doing this. This move of the government will affect people with high-income salary, who get voluntary PF deducted for Tax Free instrument.
Not only this, under the ULIP section 10 (10D) in the budget, it is proposed to remove the tax exemption on a premium of more than Rs 2.5 lakh in 1 year. While this will not apply to the existing ULIP, it will be effective only on policies taken after 1 February 2021.
Apart from this, in the Union Budget 2021, there is nothing in the salary class. Finance Minister Nirmala Sitharaman did not make any announcement for salary class in the budget. That is, the income tax slab rates of income tax will remain old. Although Agri Infa Development Cess (Agriculture Infrastructure and Development Cess) will be imposed.
In the last year’s budget, the Finance Ministry had given two tax options for the Salary Class, which are applicable from the financial year 2020-21. You can choose any option while filling Taxpayer Income Tax Return. New Tax Slab or Old. It will also be applicable in 2021-22. In the new tax slab, all exemptions have been abolished. It does not include any tax saving scheme. If the tax payer opts for the old tax slab, then they will continue to get the benefit of all types of tax rebates.
Also Read: EPFO Big Update: Employers will not get these benefits if the employee’s PF is delayed
Cut it out
- Investment in 80C
- house rent allowance (HRA)
- TA (TA)
- health insurance premiums (Mediclaim)
- Standard Deduction
- of interest on savings accounts (Saving Bank Interest)
- interest education loans (Education Loan Interest)
- Investment (NSC) National Savings Scheme
- to Home
- Entertainment Loan Allowance under Section 16 of Home Loan Interest
Benefits of new tax slab
- Cash payment in lieu of PL on retirement from VRS Interest received from
- Death Maturity Amount
- GPF Amount from
- Sukanya Samriddhi Account
- Scholarship
- Gratuity
- Tax Rebate on 1.5 lac investment
- Income from Farming
- Income
