PF Rules in 2022: Interest on excess amount will be calculated separately for non-taxable contribution and taxable contribution.
PF Rules in 2022: If you are also a PF account holder then this is the news of your work. Now the government is going to implement a new rule, which will directly affect more than 6 crore PF account holders and members of EPFO of the country. Actually, the central government is going to implement new income tax laws from 1st April.
The new rule will come into effect from April 1, under which income from contributions in excess of the limit will be taxable. All contributions made by employees up to March 31, 2021 will be treated as non-taxable contributions. It is to be noted that interest on excess amount will be calculated separately for non-taxable contribution and taxable contribution.
As per the new income tax rules, the tax-free contribution limit has been fixed at Rs 2.5 lakh for non-government employees and Rs 5 lakh for government employees. Consequently, when a non-government employee deposits an amount in his PF account in excess of the prescribed limit, the interest earned on it will be subject to tax. Similarly, if a government employee deposits an amount in excess of the prescribed limit, the interest earned from the excess amount will be subject to tax.
This will split existing provident fund (PF) accounts under the limit on tax-free contributions announced by Finance Minister Nirmala Sitharaman. The move is likely to affect the taxation process in terms of interest earned on PF contributions, with Employees’ Provident Fund (EPF) and Voluntary Provident Fund (VPF) becoming costlier by a limit. The new rule for tax-free contributions is said to offer taxpayers an easier way to calculate their taxes. It will also help in dividing taxable and non-taxable contributions.
Briefly understand what will be the effect of the New Testament
The new income tax rules cap the tax-free contribution at Rs 2.5 lakh for non-government employees and Rs 5 lakh for government employees. Interest earned on the amount in excess of the prescribed limit will be taxed.
How to file e-nomination for PF account
The Employees’ Provident Fund Organization (EPFO) has asked all provident fund account holders to file their e-nomination at the earliest. Earlier, December 31 was the last date for filing e-nomination for PF account holders. However, now the body has said that members can e-file nominations even after December 31, 2021. “No deadline for filing e-nomination has been fixed yet,” EPFO said on Twitter. Back on September 12, 2019, Employees’ Provident Fund Organization (EPFO) issued a circular and announced that it has launched an e-nomination facility, which can be availed from the member service portal of EPFO.
It should be noted that the rules for enrollment in EPF and EPS (Employees Pension Scheme) accounts differ. As per the EPF Act, only defined members of the family can be enrolled in the EPF account. Timely nominations should be filed for PF as in the event of untimely death of the account holder, the nominated family members can avail the EPFO account. In addition, EPF members have the facility to make changes in their EPF enrollment online. The member need not demand it from his employer.
Instead they can make changes through EPFO UAN portal. Several account holders faced glitches on the official website a few days before the deadline for filing e-nomination, as the page was not loading and running very slowly. According to the latest payroll data, EPFO added 12.73 lakh net subscribers in the month of October. It has registered an increase of 10.22 percent as compared to the same month last year.
