It blames ‘invisible’ 2021-22 interest credit on the new system to tax PF savings over Rs 2.5 lakh annually
It blames the ‘invisible’ 2021-22 interest credit on the new system to tax PF savings over Rs 2.5 lakh annually
Employees’ Provident Fund (EPF) members are unable to see an interest credit of 8.1% for 2021-22 in their retirement savings accounts as “software upgrade” attracts tax on PF savings of over Rs 2.5 lakh in a year Is. The Union Finance Ministry has said in the budget for 2021-22.
The ministry, citing the software upgrade being implemented by the Employees’ Provident Fund, said, “There is no loss of interest for any subscriber. Interest is being credited to the accounts of all EPF subscribers. However, this is not visible.” Giving…” Organization (EPFO).
Responding to a tweet by Mohandas Pai, co-founder of Infosys Technologies, the ministry said, “The payment is being made along with interest for all outgoing customers seeking settlement and customers seeking withdrawal.”
Mr Pai, in his tweet, tagging Prime Minister Narendra Modi and Union Finance Minister Nirmala Sitharaman said: “Dear EPFO, where is my interest? Reforms needed! Why should citizens suffer because of bureaucratic inefficiency? Pl[ease] helping out.”
For 2020-21, the EPFO board, headed by the Labor Minister, had approved an annual dividend of 8.5% for crores of EPF members, but it was credited to their accounts only till December 2021. In March 2012, the EPF rate for 2021-22 was reduced to 8.1%, the lowest level since 1977-78.
The finance ministry had in June approved the sniped EPF rate for 2021-22 and it was expected that members would soon get interest credit in their accounts.
Mr Pai in his tweet also sought the intervention of Sanjeev Sanyal, a member of the PM’s Economic Advisory Council and the Department for Promotion of Investment and Internal Trade under the Ministry of Commerce and Industry. The EPFO is the largest retirement fund manager in the country, managing assets worth over ₹16 lakh crore, and comes under the administrative control of the Union Ministry of Labor and Employment, headed by Bhupendra Yadav.
The Infosys co-founder also shared a link to an article on a portal by former professor at the National University of Singapore, Mukul Asher, moneycontrol.comTo consider reforms in the EPF interest credit process.
Thanking the Finance Ministry for responding to their concerns, Mr Pai further asked: “But can you explain why there is a lot of delay in interest credit every year? EPFO accounts are completely electronic! Year-end Why interest cannot be credited within 30 days after
Government as well as private sector employees are allowed to make voluntary contributions in addition to the statutory deduction in GPF (General Provident Fund) or EPF respectively. EPF accounts are mandatory for employees earning up to ₹ 15,000 per month in firms with more than 20 employees, with 12% of basic pay and dearness allowance as employee contribution and 12% deducted by the employer.
As of March 2020, EPFO had 24.77 crore members, of which 14.36 crore members were allotted unique account numbers and about five crore were active contributors during 2019-20.
Citing misuse of tax exemption on provident fund income, Ms Sitharaman had said that all income on PF contribution above Rs 2.5 lakh in a year will be taxable from 2021-22.
In September 2021, the Income Tax Department introduced rules to split all PF accounts into two – one with taxable contribution and interest earned on it, and the other with non-taxable contribution, which includes the closing balance of the PF account. was. March 31, 2021, and all new non-taxable contributions and interest thereon.
The annual contribution limit of ₹ 2.5 lakh is applicable for EPF members, while in GPF or other PFs where there is no contribution from the employer, the tax-free limit has been set at ₹ 5 lakh.