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

The Workers Provident Fund Organisation (EPFO) has launched new pointers on the tax deduction for workers within the non-public 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 yr. It’s obligatory for workers throughout India to have an EPF account.

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

What else do the brand new pointers imply?

– For individuals who haven’t linked their PAN to their EPF accounts, the tax will likely be deducted on their annual earnings on contributions over Rs 2.5 lakh on the fee of 20 p.c. And those that have linked their EPF accounts with their PAN tax will likely be calculated at 10 p.c.

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

– Nonetheless, if the calculated TDS is Rs 5,000 or much less, no TDS will likely 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 will likely be deducted on the fee of 30 p.c or in keeping with the provisions of the Double Taxation Avoidance Settlement between India and the respective nation.

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

– The speed 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. However the accounts are maintained on month-to-month foundation. So, if no transfers/last settlements are made throughout the monetary yr, then TDS will likely be deducted when the curiosity is paid.

Having one of many world’s largest clientele, the EPFO at the moment maintains 24.77 crore accounts of its members.