New Delhi: Finance Minister Nirmala Sitharaman has introduced to elevate the limit for tax exemption on interest earned on provident fund contribution by staff to Rs 5 lakh every year in specified instances as towards Rs 2.5 lakh that she had proposed within the Union Budget 2021.
The new provision would come into impact from April 1.
Announcing the Budget for 2021-22, Sitharaman had introduced that interest on worker contributions to PF over a specific amount has now been made taxable. The Budget for the fiscal 12 months starting April would have make interest on worker contributions to PF above Rs 2.5 lakhs every year taxable efficient April 1, 2021.
However, replying to a dialogue on the Finance Bill 2021 in Lok Sabha on Tuesday, the FM mentioned the tax-free limit is now being amended to a most of Rs 5 lakh every year.
This exemption, nevertheless, is topic to situation that the up to Rs 5 lakh contribution doesn’t embrace employer’s contribution past the statutory limit of up to 12 per cent of the fundamental pay.
She clarified that the Rs 2.5 lakh limit is protecting 92-93 per cent of the people who find themselves subscribers and they’re entitled for assured interest that’s tax free beneath this scheme.
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In the earlier 2020 Budget, the finance minister had capped the tax exemption on employers contribution to PF, NPS and superannuation funds at an combination of Rs 7.5 lakh every year.
