Interest earned on Employee Provident Fund (EPF) will be taxed above 2.5 Lakhs – Budget 2021

EPF

Union government is proposed to lavy tax on interest earned from Employee provident fund (EPF) in 2021 Budget if its exceeds 2.5 Lakh in a financial year. This is to prevent missuse by High Networth Individual salaried person who are investing crores of rupees to earn Fixed interest which also has tax exemption completely. Since they it came to CBDT notice that less than 1% of salaried persons who are contributed crores of rupees to EPF trust.

This is not a worried news for 99% salaried person as they may not earn more than 2.5 Lakhs as a interest in a financial year. it is to target those who are using this provision as investment option just to avoid tax.
Cureently employee contribute 12% towards EPF and the same amount co-contributed by employer in EPF trust. Employee has a option to contribute more thatn this under Voluntary Profvident Fund(VPF).

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