Taxability of interest earned on EPF -new amendment
Earlier, interest earned on EPF contributions was completely exempt. But with the new amendment w.e.f 01.04.2022, certain portion of interest income is being taxed in the hands of employees. let us understand in detail. WHAT IS TAXED? Interest accrued on contribution made to EPF by employer and employee during the financial year over and above the threshold limits is taxed in the hands of employee. WHAT IS THE THRESHOLD LIMIT? For the interest income to be taxed, Finance Ministry has mentioned threshold limits as below. If employer does not contribute to PF - Rs.500000 If both employer and employee contributes to PF - Rs.250000 HEAD OF INCOME: the taxable portion of interest will be taxed under the head "INCOME FROM OTHER SOURCES". TDS ON TAXABLE INTEREST: If the taxable interest exceeds Rs.5000 per annum, then EPFO will deduct TDS @10% u/s234A. However, the taxable interest income will appear in 26AS/AIS and hence, the employee has to include this income while filing the re...