New Delhi, 2/9: The Central Board of Direct Taxes (CBDT) has issued a new rule for calculation of tax on the interest of EPF deposits. This is for the contribution of more than 2.5 lakh rupees annually in EPF. A separate account will be opened within the Provident Fund account for computing the taxable interest under the new provision.
In the budget for the year 2021, Finance Minister Nirmala Sitharaman had said that the interest received by those whose annual contribution in EPF and VPF is more than Rs 2.5 lakh will be taxed. The Central Board of Direct Taxes or CBDT has issued a notification in this regard on August 31 this year.
Contribution up to March 31, 2021 will remain non-taxable Any contribution made by an individual to EPF till March 31, 2021 will remain non-taxable. After the financial year 2020-21, the calculation of interest on these two EPF accounts will be different. These two accounts will be created within the Provident Fund for the financial year 2021-22 and subsequent financial years.