From April 2021, it is proposed to tax interest on PF contribution over Rs 2.5 lakh per annum. At present, there is no tax on the interest received on provident fund deposits.
The amount of Employees Provident Fund (EPF) is very important for every employed person. This is part of your salary, but interest is also paid by the government on this amount. However, in the general budget, the government has said to take tax with conditions.
What is the proposal: From April 1, 2021, it is proposed to tax interest on PF contribution of more than 2.5 lakh rupees per annum. At present, there is no tax on the interest received on provident fund deposits. Finance Minister Nirmala Sitharaman said that the purpose of the EPF is welfare of employees and no person who earns less than Rs 2 lakh monthly will not be affected by this budget proposal. This is to say that a large section will not come under this tax.
What is the contribution of the employee: The employee contributes 12 percent of the total amount of any employee, including the basic salary and DA. At the same time, 12% PF contribution is also done by the company.
Let us know that the employee can increase his PF contribution. It can also be 100% of basic salary. Let us know that at the rate of 8.50 per cent interest is being paid on PF.
You can also know the balance from a missed call: for the information about your PF contribution, you have to check the passbook. At the same time, you can also get information about balance of PF account from missed call. For this, you have to make a missed call from the registered mobile number on 011-22901406.
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What’s more: In the budget, the government has also proposed to create a web portal to identify the workers of the informal sector, so that they can be given various benefits like health, loans and food.
The budget clearly states that companies which delay in depositing Social Security contributions like Employees Provident Fund will not be able to claim tax deduction in their income. An amendment to the Finance Bill 2021 has been proposed in this regard, to ensure that companies submit social security contributions of their employees on time.
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