New EPFO Guidelines Explain How Contribution Above Rs 2.50 Lakh Will Be Taxed

Published:Nov 29, 202310:35

EPFO Issues New Guidelines: Check How PF Contributions Above Rs 2.50 Lakh Will Be Taxed

New EPFO pointers clarify how PF contribution above Rs 2.50 lakh might be taxed

The Employees Provident Fund Organisation (EPFO) has launched new pointers on the tax deduction for workers within the personal sector whose contribution to the retirement financial savings account is greater than Rs 2.50 lakh, yearly.

In a round, the EPFO mentioned that the taxation threshold for EPF contribution for presidency staff could be Rs 5 lakh yearly. This taxation regime has come into impact from April 1 this 12 months. It is obligatory for workers throughout India to have an EPF account.

The round mentioned the TDS might be deducted when the curiosity is paid to an EPF account. For these pending ultimate settlement or transfers, TDS might be deducted at a later date throughout the ultimate settlement.

What else do the brand new pointers imply?

– For those that haven't linked their PAN to their EPF accounts, the tax might be deducted on their annual revenue on contributions over Rs 2.5 lakh on the price of 20 %. And those that have linked their EPF accounts with their PAN tax might be calculated at 10 %.

– The round mentioned EPFO will preserve a non-taxable account and a taxable account for all such members who contribute over Rs 2.5 lakh.

– However, if the calculated TDS is Rs 5,000 or much less, no TDS might be deducted on the curiosity credited to these EPF accounts.

– For ex-pats and non-resident staff who've energetic EPF accounts in India, the tax might be deducted on the price of 30 % or based on the provisions of the Double Taxation Avoidance Agreement between India and the respective nation.

– Also, TDS could be relevant to all EPFO members, together with members of exempted institutions or exempted trusts.

– The price of TDS would stay the identical in case of the loss of life of the EPFO member.

The curiosity earned on the quantity in EPF accounts is credited yearly. But the accounts are maintained on month-to-month foundation. So, if no transfers/ultimate settlements are made throughout the monetary 12 months, then TDS might be deducted when the curiosity is paid.

Having one of many world's largest clientele, the EPFO presently maintains 24.77 crore accounts of its members.

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