Tax On EPF Interest
- In the Union Budget 2021, Finance Minister announced a decision to tax interest incomes on annual Employees' Provident Fund (EPF) and Voluntary Provident Fund (VPF) contributions of over Rs 2.5 lakh.
- This will only apply to the employee's contribution and not that of the employer. This restriction shall be applicable only for the contribution made on or after 01.04.2021.
- This will impact high-income salaried people using voluntary provident fund for tax-free interest. Individuals who contribute over Rs 20,833 a month to PF will be taxed.
What is EPF?
It is mandatory for any company with 20+ employees to comply with the EPF schemes of the government. As per this scheme, the employer, as well as the employee, are required to contribute some part of the monthly salary of the employee (generally 12%) into the EPF investment account.
Source : Business Today