Union Finance Minister Nirmala Sitharaman has proposed taxability of interest on various provident funds where income is exempt, in her Budget speech presented in Parliament on Monday (February 1). The Budget for the fiscal year beginning April will now make interest on employee contributions to PF above Rs 2.5 lakhs per annum taxable effective April 1, 2021.
In the 2020 Budget, the finance minister had capped the tax exemption on employers contribution to PF, NPS and superannuation funds at an aggregate of Rs 7.5 lakh per annum.
Finance Minister Nirmala Sitharaman said the Employee Provident Fund (EPF) is aimed at the welfare of workers and any person earning less than Rs 2 lakh per month will not be affected by the Budget proposal.
Expenditure Secretary T V Somanathan said the number of people who actually contribute more than Rs 2.5 lakh is less than 1 per cent of the total number of contributors in the EPF. Employees’ Provident Fund Organisation (EPFO) has over…