EPFO Alert ! Before filing Income Tax Return, know the rules of tax on PF

EPFO Alert: The government has decided to reduce the tax benefit on PF to target the high-income people who are benefiting from the scheme.

Employees’ Provident Fund (EPF) is one of the most important financial planning and retirement investment options for lakhs of employees. With guaranteed returns and tax benefits, EPF is an investment for most people. Earlier there was also the Tax Rules on EPF on Kia Contribution and Withdrawal, but the government has brought changes in the tax benefits available to the employers and employees for contribution to EPF. With effect from April 1, 2022, provident fund accounts have been divided into taxable and non-taxable accounts. The due date for filing income tax is very near. It is necessary to file the return by 31st July. Let us also tell you what kind of changes the government has made in this. 

Understand the rules in these points

• Any interest on contribution made to EPF of an employee remains tax free only for contributions up to Rs 2.5 lakh per annum.
• Interest is charged to tax on contributions made by an employee in excess of Rs 2.5 lakh annually.
• If an employer is not contributing to the EPF of an employee, then the contribution limit has been increased to 5 lakhs.
• Tax is levied only on the excess contribution above the threshold and not on the total contribution.
• The additional contribution and the interest earned thereon will be kept in a separate account with EPFO.
• Employer’s contribution to Provident Fund (PF), NPS and retirement is tax free totaling Rs 7.5 lakh per annum. 
• The employer has to mandatorily provide EPF contribution for those employees whose monthly income is up to Rs 15,000.
• The EPFO ​​has reduced the interest rate for the financial year 2021-22 to a four-decade low of 8.1 percent. 

Many Assets Are Giving Higher Returns

Even though EPFA interest rates are currently at a 40-year low, but is giving higher returns than many assets. FD rates of public sector banks are still around 6 per cent, while EPFO ​​is giving returns of more than 8 per cent. On the other hand, the interest rates of the small savings scheme of the post office are also much lower than that of the EPFO. The interest rate in the 5-year time deposit scheme is 6.7 percent per annum. The interest rates of Senior Citizen Saving Scheme are being seen at 7.4 percent. Even the interest rates of PPF are being seen at 7.1 percent and Sukanya Yojana 7.6 percent.

File ITR by July

31st is July 31st Last date to file returns The last date to file Income Tax Returns for the financial year 2021-22 (FY22) is approaching soon. The last date for filing income tax return is 31 July 2022. The Income Tax Department made a tweet on Saturday, 16 July 2022, stating the due date. File income tax return for the financial year 2021-22 (FY22). Everyone should remember the last date, which is 31st July 2022. Yelled taxpayers and unaudited cases should file Income Tax Return (ITR) within the due date to avoid problems later. People can file ITR after the deadline has passed but they will have to pay a late fee. For more information about this, you can visit incometax.gov.in.