Updated Feb 06, 2021 | 06:09 IST
Presently, any payment from a provident fund set up under the Provident Funds Act, 1925 or any recognised fund set up by Central Government is exempted under section 10(11). Know if tax on PF interest also cover contribution to PPF account?
New Delhi: Union Budget 2021 has proposed to levy income tax on interest earned by an employee towards his/her contributions to the provident fund of over Rs 2.5 lakh per annum, starting from 1 April. "In order to rationalise tax exemption for the income earned by high-income employees, it is proposed to restrict tax exemption for the interest income earned on the employees’ contribution to various provident funds to the annual contribution of Rs 2.5 lakh," FM Nirmala Sitharaman said in her Budget 2021 speech.
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Belying huge expectations, did not provided any income tax relief to tax payers.
No changes in income tax slabs or rates have been proposed.
Nor have any additional tax exemptions or deductions been introduced.
Standard deduction for the salaried and pensioners also remains same as before.
No change in tax rates or slabs means that your income tax payout is, for most people, unaffected by this Budget.
But if your salary's high or you use voluntary provident fund contributions, there's a bit of bad news for you.
From April 1, returns on investment of more than Rs 2.5 lakh in two of the most popular instruments - provident fund and unit linked insurance plan (ULIP) - will be taxed.