EPF Rules Change! Changes have been made in many rules of EPFO, if you are also a subscriber of EPFO, then it is important for you to know all those things which you do not know.
For the current financial year 2021-22, the interest rate has been reduced to 8.1 percent. This is a big setback for the employees. Earlier the interpest rate on PF was 8.5 percent. However, in comparison to the Fixed Deposit-FD of banks, still more interest is being given on it.
Now PF interest is not completely tax free. It is divided into several sections. Different classes of investors have to pay different income tax. According to the changed rules, only investment up to Rs 2.50 lakh annually in the Provident Fund will be tax free. More than this investment and the interest received on it will now be considered as income and you will have to pay income tax on it.
Before April 2021, no tax was to be paid on any amount invested and interest received on it. That’s why many employees used to deduct PF more than the mandatory limit so that more interest would be available. But now it is not so. If your employer does not contribute to PF, then up to Rs 5 lakh can be invested.
In the Provident Fund, 12 percent of the basic salary is invested by the employer and 12 percent by the employee. Out of the 12 percent share of the employer, 8.33 percent goes to the Employees’ Pension Scheme. The remaining 3.67 percent amount is deposited in your PF account. No interest is available on the amount given in the pension scheme because the contribution of the investor and the employer is necessary.
