New Provident Funds Rules 2021 || Now Interest received from Provident Fund will be Taxable under Income Tax
New Rule has been introduced by the Government of India in Union Budget in Feb 2021 that “If any person deposits more than 2.5 Lakhs in a Year in PF account through PF Deduction, then he will liable to pay tax on Income/Interest received from that amount”
We know that Companies having more than 20 employees deduct and deposit the amount of Provident Fund along with Employer’s Contribution on which the employee also received the Interest from the government.
According to the latest Union Budget 2021, If an Individual Contribute more than 2.5 Lakhs (in a year) in PF Account then the income (interest) earned on that Deposit will be taxable but only in that situation where the Total Income of Taxpayer exceed the Slab Rate of 10% (which is more than 5, 00,000 in both Old and New Tax Slab Regime) in any year
This interest will we treated as Separate Interest Income like Interest on FD but here is no Bank to deduct TDS on your Interest, you needs to Calculate Advance Tax and pay tax on Timely basis
Normally an Individual contribute 21,600 on PF during the year (12% per month on 15,000 Basic Salary)
To cross the limit of 2,50,000 of contribution, one needs to receive salary of Rs. 1,73,611 in a year as a Basic Salary Portion (Not Gross Salary). Only in this case, the annual contribution will be 2,50,000 (at the rate of 12%)
We know that Companies having more than 20 employees deduct and deposit the amount of Provident Fund along with Employer’s Contribution on which the employee also received the Interest from the government.
According to the latest Union Budget 2021, If an Individual Contribute more than 2.5 Lakhs (in a year) in PF Account then the income (interest) earned on that Deposit will be taxable but only in that situation where the Total Income of Taxpayer exceed the Slab Rate of 10% (which is more than 5, 00,000 in both Old and New Tax Slab Regime) in any year
This interest will we treated as Separate Interest Income like Interest on FD but here is no Bank to deduct TDS on your Interest, you needs to Calculate Advance Tax and pay tax on Timely basis
Normally an Individual contribute 21,600 on PF during the year (12% per month on 15,000 Basic Salary)
To cross the limit of 2,50,000 of contribution, one needs to receive salary of Rs. 1,73,611 in a year as a Basic Salary Portion (Not Gross Salary). Only in this case, the annual contribution will be 2,50,000 (at the rate of 12%)
Voluntary Contribution on PF (VPF) will be also considered in Total PF Contribution
If someone receiving Basic Salary of 20,83,332 in a year, then he/she automatically comes under 30% of Tax Slab
So, a normal Taxpayer doesn’t need to worry about the same. This is just for the Person with Higher Income
If someone receiving Basic Salary of 20,83,332 in a year, then he/she automatically comes under 30% of Tax Slab
So, a normal Taxpayer doesn’t need to worry about the same. This is just for the Person with Higher Income
Although This rule will be applicable from April 2021
Hope you like the post and gained lots of knowledge from this article. Do share with your friends and families so that they can also get the information
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Team: Online Knowledge Zone
Hope you like the post and gained lots of knowledge from this article. Do share with your friends and families so that they can also get the information
Thanks
Team: Online Knowledge Zone
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Tags: #EPFO #UnionBudget2021
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