EPFO Updates: It has also been reported that EPFO is going to make some new changes in the rules of the Provident Fund. Existing PF accounts can be divided into two parts from April 1, 2022.
New Delhi | Jagran Business Desk: In an important update for all government and private sector employees, the Income Tax Department will start levying tax on PF returns starting from April 1, 2022. The Central Board of Direct Taxes (CBDT) will start implementing the Income Tax (25th Amendment) Rule 2021 from April 1, which will bring both Employee Provident Fund (EPF) and General Provident Fund (GPF) under the purview of this rule.
Read More : How to transfer EPF account from EPFO to employer’s EPF trust and vice versa
Notably, Finance Minister Nirmala Sitharaman made a special announcement in the Union Budget 2021. She had imposed a tax-free contribution cap of up to Rs 2.5 lakh in the EPF account, which means that the interest income of the contribution on top of it will be taxed. Meanwhile, in the case of government employees, the limit of tax-free contribution to GPF is Rs 5 lakh per annum.
According to the CBDT, Income tax will be collected from the salary of the employees, which means if a private employee or a government employee has contributed above the said limit, then the interest income will be considered as income and the IT department will charge tax on it. This tax deduction will be mentioned in Form 16.
It has also been reported that EPFO is going to make some new changes in the rules of the Provident Fund. Existing PF accounts can be divided into two parts from April 1, 2022. In this, in case of a contribution in excess of the limit of the employee, the interest income will be taxed. Actually, the purpose of the new rules is to prevent high-income people from taking advantage of the government welfare schemes.
