EPFO News: The Employees’ Provident Fund Organisation (EPFO) gives income tax exemption to employers on their EPF contribution to the EPF account of its employees.
EPFO News: The Employees’ Provident Fund Organisation (EPFO) gives income tax exemption to employers on their EPF contribution to the EPF account of its employees. However, it has been observed that the employer deduct their EPF contribution from the monthly salary of the EPFO member in their office but they didn’t deposit it into the EPF account of the concerned EPF account holder. In that case, the EPF account holder loses EPF interest rate while on the other hadn the employers enjoy income tax exemption for the monthly EPF contribution that they used for their own purpose.
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Taking cognizance of this malpractice of the recruiters, the Narendra Modi government has changed Income Tax Return (ITR) filing rules for such employers. Finance Minister Nirmala Sitharaman made an announcement in this regard in Budget 2021 yesterday.
As per the Nirmala Sitharaman’s Budget 2021 speech document, from FY 2021-22 those employers who delay in deposit of monthly EPF contribution of an EPF account holder won’t be able to claim income tax exemption in their ITR.
“In order to ensure that employees’ contributions are deposited on time, I reiterate that the late deposit of employee’s contribution by the employer will not be allowed as a deduction to the employer,” said Nirmala Sitharaman.
Sitharaman said that the Modi Government has noticed that some employers deduct the contribution of employees towards Provident funds, superannuation funds, and other social security funds but do not deposit these contributions within the specified time. For the employees, this means a loss of interest or income. In cases where an employer later becomes financially unviable, non-deposit results in a permanent loss for the employees.
So, the move aims to ensure timely deposit of the monthly EPF contribution by the recruiter into the EPF account of its employees so that the EPF account holder doesn’t lose its EPF interest credit.
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