Annual Rs. Tax will be levied on interest on contributions above Rs 2.5 lakh

New delhi date. 3

Now, if more than Rs 2.5 lakh is contributed annually to the Provident Fund (PF), tax will be levied on the amount of interest received on contributions exceeding Rs 2.5 lakh per annum. That is, tax will have to be paid on interest earned on contributions of more than Rs 2.5 lakh per annum in the Provident Fund. Sitaram had announced this in the 2021-2 budget. The Central Board of Direct Taxes (CBDT), the apex decision-making body of the income tax department, has announced rules for calculating tax on the interest of the provident fund.

According to experts, after the notification was issued by the income tax department, all speculations on whether the interest earned on the amount deposited in the PF will be taxed have come to an end.

According to the notification issued by the Income Tax Department, in case the company does not deposit any contribution in the employee's PF account, instead of the annual contribution of Rs. Will be charged.

However, according to experts, the 5 per cent PF account holders do not contribute more than Rs 2.5 lakh per annum, so the new rule does not make any difference to them and they will continue to get tax-free interest. As a result, small and medium-sized taxpayers will not be affected by the new rule.