The government has proposed to bring the interest on PF (Provident Fund) contribution of Rs 2.5 lakh or more per annum from the new financial year starting from 1 April. But this will not apply to PPF (Public Provident Fund). Know the whole thing here ..
This tax was announced by Finance Minister Nirmala Sitharaman in the budget proposals for 2021-22.
New Delhi: good news for those investing in PPF (Public Provident Fund). The tax on the contribution of Rs 2.5 lakh or more annually to the Provident Fund will not apply to PPF. A senior officer has said this. This tax was announced in the budget proposals for 2021-22 by Finance Minister Nirmala Sitharaman. Since then it was feared that PPF may also be brought under its purview.
But the official said that this limit will not apply to PPF as it already has a contribution limit of Rs 1.5 lakh per annum. The government has proposed to bring the interest on PF (Provident Fund) contribution of Rs 2.5 lakh or more per annum from the new financial year starting from 1 April. The official said that exemption on EPF (Employee Provident Fund) and GPF (General Provident Fund) has been removed. It is mentioned in the Act.
What is known? In
this case, the Central Board of Direct Taxes (CBDT) did not answer the questions sent to him. One of the main announcements of the tax budget was the interest on the contribution of more than Rs 2.5 lakh in EPF. According to tax experts, the budget memorandum has not clarified where this rule will apply. This led to confusion.
Aarti Raote, partner at Deloitte India, said that the sections mentioned in the memorandum include PPF but the annual limit in the PPF Act is Rs 1.5 lakh. Therefore banks will not accept more than this limit. Hence taxpayers will not cross the Rs 2.5 lakh limit under any circumstances.
Some experts say that the change in the income tax law will not affect PPF as any change in PPF contribution will have to amend the PPF Act. Shallini Jain, a tax partner in EY, said, unless the PPF rules change and taxpayers are not allowed to deposit more than 2.5 lakh rupees annually in PPF, the PPF changes in section 10 (1) Will not have any effect.
