EPF Latest News: Do you contribute more than Rs 2.5 lakh annually to Employees’ Provident Fund? If yes, we have some big news for you. Also Read – Sitharaman Deceived Poor, Working Class, Migrants, Farmers: P Chidambaram on Budget 2021
Individuals whose provident fund contribution is Rs 2.5 lakh or above in a financial year, will not be able to seek tax exemption on the interest earned from the next financial year, reported NDTV. Also Read – FM Nirmala Sitharaman Cuts It Short This Year, Budget Speech Around 1 Hour & 50 Minutes
Finance Minster Nirmala Sitharaman, while presenting Union Budget 2021, said, “In order to rationalise tax exemption for the amount earned by high income employees, it is proposed to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh.” Also Read – Focus on Infrastructure, Boost to Healthcare Sector, Two Important Features of Budget 2021: FM
At present, interest earned on provident fund is exempted from income tax.
“EPFO is for welfare of workers and workers will not be affected by this move. It is only for big ticket money that comes into EPFO, having tax benefit and also assured 8 per cent return,” Sitharaman said while addressing the post-budget press conference.
“You find huge amounts, at times to the extent of Rs 1 crore each month. For somebody who puts Rs 1 crore each month, what would be his salary for him to get tax exemption and an assured return? We thought we are not reducing workers’ right but at the same time getting tax exemption and also getting 8 per cent rate of interest for somebody who puts Rs 1 crore per month into the account we thought maybe its not right and therefore we have put that ceiling,” the FM said.
“The number of people who contribute the sum we have indicated is less than 1 per cent of total contributors in the EPFO,” TV Somanathan, expenditure secretary added.
Retirement fund body EPFO credited 8.5 per cent rate of interest on employees’ provident fund (EPF) to its six crore members for financial year 2019-20.
