If your Provident Fund deposited every month, ie, PF exceeds 250000 Rs in a year, then the interest received on it will come under the purview of income tax. The government has now made a rule for tax on the interest received on puff deposits, that is why we are explaining it to you here.
Finance Minister Nirmala Sitharaman made his announcements
Let us tell you that Finance Minister Nirmala Sitharaman made this announcement while presenting the budget for the financial year 2021-22 itself. If someone’s contribution in the PF is more than 250000 Rs, then such people will have to pay tax on this interest income received from it.
Now the Central Board of Direct Taxes has issued notifications regarding this: and according to these notifications, for the calculation of maximum interest. A separate account will be opened within the Provident Fund account by the Employees’ Provident Fund Organisation. That is, such people will have 2 types of PF accounts. Tax expert Balvan Jain says that the additional contribution of 250000 Rs in a year will go to another account. The interest that will be earned on this will be tax deducted according to the person’s own tax slap, not only this if someone is thinking that by withdrawing from the PF in a year, he can save his tax. So this will also not be possible because the withdrawal of PF will be done from the amount deposited in previous years.
Do not take into account the amount deposited this year, interest will be taxed only on puff deposits, you have to keep in mind that here the matter is being taxed on the interest earned on PF deposits. On the total deposit of PF, then your employer already deducts tax as per the rules, and details of this are mentioned in the income tax return you file.
Under which section this rule is created?
Under section 8 of the income tax, only up to 150000 Rs deposited PF income tax-free: Any additional amount deposited above that will be added to your taxable income, when will this rule be applicable. The Central Board of Direct Taxes said that the new rules will be effective from 1 April 2022. That is, according to the notifications issued by the Central Board of Direct Taxes, in the deposit PF till March 31, 2021. Any contribution made on behalf of a subscriber to the Employed Provident Fund Organization shall be non-taxable.
After the financial year 2020-21, the calculation of interest on the PF account will be done separately, what will happen in the separate account, then it will happen from next year. What if someone’s contribution in a year is more than Rs 250000, then any contribution above Rs 250000 to him and the interest received on it will be kept in a separate account.
Whatever interest he will get in this account, he will have to pay tax on it, only the employees of the private sector of interest-free interest on 250000 rupees contribution every year in the PF account.
No tax will be levied on the interest income received from deposits up to Rs. 500000 people with government jobs, however, the government also says that: People making annual PF contributions up to Rs 250000 are only 1% in the country, so it will not affect more people. This rule has been imposed to prevent some big players who deposit crores of rupees in PF and get tax-free interest on it.