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new Delhi. There is going to be a change in the PF rules from April 1, 2022. Under this, now the interest received on the amount more than Rs 2.5 lakh deposited in PF account will be taxable. This rule will be applicable only to those accounts, which deposit more than Rs 2.5 lakh in PF account in a financial year.
However, companies, subscribers and tax experts are waiting for more clarity on the tax on interest earned on PF deposits above Rs 2.5 lakh. This was announced by Finance Minister Nirmala Sitharaman in the budget last year. But, till now there is no clear rule, while only 15 days are left for the new rule to come into force.
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How tax will be charged, not clear
EPFO and organizations managing PF contribution of employees want clarity in rules regarding tax liability and timing of interest on contribution above Rs 2.5 lakh. Even on this the picture is not clear whether the tax to be taken will be charged every year or it will be a lump sum at the time of withdrawal of funds on retirement.
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The announcement was made in the budget of 2021-22
In the budget for the financial year 2021-22, it was announced to tax the interest received on the contribution of more than Rs 2.5 lakh in the PF account of the employees. For this, there is a need to divide the accounts of employees contributing more than Rs 2.5 lakh annually from the new financial year starting April 1, 2022. One account will have the exempt portion, while the other account will have a taxable portion above Rs 2.5 lakh.
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confusion will arise
Experts say that if this is not taken into account, then due to ambiguity in the rules related to changes from April 1, confusion can arise on the calculation of tax. of EY India
CBDT’s circular is also not clear
Tax partner Sonu Iyer says that it is not clear whether section 10 of the Income Tax Act will be amended for this or whether interest will be calculated on taxable contribution under 9D. There is an ambiguity regarding this. The Central Board of Direct Taxes (CBDT) had issued a circular on this on September 1, 2021, but experts say that more clarity is needed.
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Tags: Employees’ Provident Fund (EPF), EPF, Epfo
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