EPFO Major Update! TDS On Interest Rules Have Changed

EPFO Major Update! TDS On Interest Rules Have Changed The Employees' Provident Fund Organisation (EPFO) has announced a new adjustment in the rules governing the taxation of interest earned. According to report, if a person contributes Rs 2.5 lakh or more to their EPF account in a year, they will be required to pay tax on the interest earned even if they die. On the interest earned, contributors will be charged a 10% Tax Deducted At Source (TDS). In addition, if the person has not linked the PAN card to the EPF account, they would be required to pay double the TDS of 20%. However, this is only applicable if donations are made after April 1, 2021. The new rules will take effect on April 1, 2022. The government has reduced the EPFO interest rate from 8.5 percent to 8.1 percent. Finance Minister Nirmala Sitharaman maintained the exemption ceiling of Rs 2.5 lakh per year in Budget 2022. The TDS will be charged even if the person died during the year, according to the report. Contributions made or to be made must be greater than Rs 2.5 lakh.

How will taxation be implemented?

If a person contributes more than Rs 2.5 lakh to their EPF in a year, tax will be paid on the excess money as well as the interest earned on it. TDS will be 10% for those who have linked a valid PAN card to their EPF account. Otherwise, the rate will be 20%. The limit for tax-free contributions to the General Provident Fund (GPF) is Rs 5 lakh per year.