It is expected that this will increase the pressure on institutions / companies to submit employee’s PF contracts on time.
New Delhi: Institutions which delay in depositing their contract in the provident fund of employees will not be able to claim tax deduction in their income. It has been proposed in Budget 2021. It is expected that this will increase the pressure on institutions / companies to submit employee’s PF contraption on time. This will ensure that institutions will not be able to use this money for other purposes. Not only this, the employees will not have to bear the loss of interest on this amount.
In this regard, an amendment has been proposed in Finance Bill 2021, to ensure that the institutions submit social security contributions of their employees on time.
In his budget speech, the Finance Minister said, “We have found that some institutions deduct employee contributions for provident funds, retirement funds and other social security funds.” But, do not submit this contribution within the stipulated time. ” He said that this means a reduction in interest or income for the employees. In cases where the financial condition of the institute deteriorates later, there is a permanent loss to the employees in the form of unspent deposits. Sitharaman told the House, “To ensure that the contributions of the employees are submitted on time, I reiterate that late submission of the employees’ contributions will not be allowed on behalf of the institute.”
The changes in this regard will come into effect from April 1, 2021. This rule will be applicable to companies / institutions filing ITR for the financial year 2020-21.
Tax partner at EY India – People Advisory Services Shalini Jain says that the new provision will give more protection to employees. This will ensure that the companies submit their contracts in time to the PF. It will also protect the employees from any possible loss.
How is the interest calculation done on EPF deposits?
Under the EPF Scheme Scheme, for April 2020, the Institute has to submit EPF Contribution by 15 May 2020. Once the money is deposited, interest on this contract starts accruing from June 1, 2020.
The thing to keep in mind here is that there are different rules regarding the delay in submitting EPF contributions from the institute and not submitting it. Even if the institution delays in submitting EPF contract for April 2020, the employee will get interest only from June 1, 2020. At the same time, if the institute does not deposit it due to financial problem, then the employee does not get any interest on his PF account for that period.
What else were important announcements?
Apart from this, from April 1, 2021, tax is proposed on interest on interest paid on PF contravention more than 2.5 lakh rupees per annum. At present, there is no tax on the interest received on the PF deposit. The government has also proposed to create a web portal to identify informal sector workers so that they can be given various benefits like health, loans and food.
