According to the budget 2021-22, whoever has an annual contribution of PF 2.5 lakh or more in any financial year, will no longer get a rebate on its interest. Finance Minister Nirmala Sitharaman said in this regard that the workers will not be affected by doing this, but to make tax exemption logical, it is being done in relation to high-income employees.
In the budget presented on Monday, Finance Minister Nirmala Sitharaman announced that any person who has contributed Rs 2.5 lakh or more in a financial year to the Employees Provident Fund or PF Fund, will now have to pay tax on it. That is, now these people will not be able to claim tax exemption on the interest received from PF, this provision will come into effect from April 1.
Steps taken to rationalize the exemption
According to the budget 2021-22, whoever has an annual contribution of PF 2.5 lakh or more in any financial year, will no longer get a rebate on its interest. The Finance Minister had said that to make tax exemption logical, it is being done in relation to high-income employees.
Explain that at present there is no income tax of any kind on the interest received on the contribution of PF. The Finance Minister also said that ordinary employees will not be affected by this, who are getting 8 percent return with tax exemption on the interest of PF.
Workers will not be affected
In the press conference held after presenting the budget, Finance Minister Nirmala Sitharaman also said that if someone’s income is in crores and he puts it in the PF, then think what his income will be. In such a situation, this limit has been imposed only to prevent its misuse.
The Finance Minister said that PFO is for the welfare of workers and this step will not affect the workers. It is only for big money, which comes in EPFO, which has tax benefits and assures 8 percent return.
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