Provident fund comes under income tax from April 2022
𝐌𝐨𝐫𝐞 𝐚𝐛𝐨𝐮𝐭 𝐢𝐧𝐭𝐫𝐨𝐝𝐮𝐜𝐢𝐧𝐠 𝐭𝐡𝐞 𝐏𝐅 𝐭𝐚𝐱𝐚𝐭𝐢𝐨𝐧
From
Apr 1, 2022, 𝘪𝘯 𝘗𝘳𝘰𝘷𝘪𝘥𝘦𝘯𝘵 𝘧𝘶𝘯𝘥𝘴 ,𝘰𝘯
𝘤𝘰𝘯𝘵𝘳𝘪𝘣𝘶𝘵𝘪𝘰𝘯𝘴 𝘢𝘣𝘰𝘷𝘦 2.5 𝘓𝘢𝘬𝘩𝘴, 𝘢𝘯𝘺
𝘪𝘯𝘵𝘦𝘳𝘦𝘴𝘵 𝘨𝘦𝘯𝘦𝘳𝘢𝘵𝘦𝘥 𝘸𝘪𝘭𝘭 𝘣𝘦 𝘵𝘢𝘹𝘢𝘣𝘭𝘦 𝘣𝘺
𝘵𝘩𝘦 𝘨𝘰𝘷𝘦𝘳𝘯𝘮𝘦𝘯𝘵.(Read about income tax changes here)
𝐏𝐅
𝐜𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧𝐬 𝐰𝐚𝐬 𝐦𝐞𝐚𝐧𝐭 𝐟𝐨𝐫 𝐬𝐨𝐜𝐢𝐚𝐥
𝐬𝐞𝐜𝐮𝐫𝐢𝐭𝐲 𝐨𝐟 𝐭𝐡𝐞 𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐞𝐬 𝐞𝐬𝐩𝐞𝐜𝐢𝐚𝐥𝐥𝐲
𝐭𝐡𝐞 𝐦𝐢𝐝𝐝𝐥𝐞 𝐚𝐧𝐝 𝐥𝐨𝐰𝐞𝐫 𝐜𝐥𝐚𝐬𝐬. Hence they were kept
tax free.
Back then you could do voluntary contribution without limit which again was tax free.
But
employees earning huge sum as salaries found this benefit and started
using this scheme as a tax saving opportunity. They were voluntarily
contributing huge sum into EPF every month so that they remain tax free.
Here Government had to give a higher rate of interest on the contributions, while practically losing the tax on that as well.
This move is intended to counter this situation and get back some taxes on the interest earned from PF accounts above 2.5 Lakhs.
𝐇𝐨𝐰𝐞𝐯𝐞𝐫
𝐭𝐡𝐢𝐬 𝐫𝐮𝐥𝐞 𝐰𝐨𝐮𝐥𝐝 𝐛𝐞 𝐚𝐩𝐩𝐥𝐢𝐜𝐚𝐛𝐥𝐞 𝐨𝐧𝐥𝐲 𝐟𝐨𝐫
𝐞𝐦𝐩𝐥𝐨𝐲𝐞𝐞 𝐜𝐨𝐧𝐭𝐫𝐢𝐛𝐮𝐭𝐢𝐨𝐧𝐬 𝐩𝐚𝐫𝐭 𝐨𝐟 𝐏𝐅. Employer
contribution will be exempt from taxes.
This would also mean
splitting the PF accounts of high income employees into two. The first
one would have the tax free contributions and taxable part of above 2.5
lakhs will move into a separate account.
#tax #directtax #finance #india #incometax #incometaxreturn
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