Big alert to EPF Subscribers! As per recent amendment passed in budget 2021-22, Contributions beyond 2.5 lakh are subject to tax. So every epf subscriber is liable to pay tax if his epf a/c crosses the threshold limit of 2.5 lakh in a financial year.
Latest amendment to be implemented on epf a/c’s post April 1st, 2022 onwards–
- As per CBDT(Central Board of Direct Taxes) interest income above 2.5 lakh on epf contributions are subject to tax
- New section 9D is introduced in the income tax laws on the employees contribution over and above 2.5 lakh
- From new financial year 2022-23 onwards epf a/c’s are to be categorised under- Contribution accounts and Non Taxable Contribution accounts
- EPF contributions over and above 2.5 lakh are split into contribution accounts whereas epf contributions below 2.5 lakh are to be deposited in non taxable contribution accounts
- By splitting epf contributions among contribution and non taxable contribution a/cs, computing tax would become easier
So epf subscribers be alert on the latest amendment. With effect from April 1st,2022 you should split your epf contributions into two a/c’s- Non Taxable Contribution a/c’s and taxable a/c’s(contribution a/c’s). So plan your dealings accordingly!