Did You Check Your EPF Contribution? Here's Why You Should?

As per the Income tax rule, there is a provision which states that on the annual EPF contribution by the EPF member over and above the specified limit, the interest rate earned shall attract taxation implication. So, now as the yearly assessements for most workforce would have been done, you need to check your EPF contribution. This said, remember the EPF amount contributed above the threshold value shall also be taxed.

Did You Check Your EPF Contribution? Here's Why You Should?

Latest income tax rules on EPF

Effective from April 1, 2022 or the last fiscal year if the annual contribution of the EPF member towards EPF and VPF taken together is over Rs. 2.5 lakhs then interest rate earned on this excess EPF contribution as well as the over and above limit of Rs. 2.5 lakh shall attract taxation implication.

So, any excess contribution and the interest earned on EPF on this excess contribution above the specified Rs. 2.5 lakh limit shall be taxed as per the individual's applicable slab rate. Also, this excess contribution is also taxable under the new ruling under the income tax provisions.

For other EPF members, where the employers don't make a contribution, the limit is of Rs. 5 lakh.

So, to know whether your EPF contribution is taxable or not, you may know of the monthly contribution from your salary slip and likewise can compute annual EPF contribution. This if it comes above Rs. 2.5 lakh then the EPF earning on it together with the excess amount shall attract taxation implications.

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