PF tax ceiling will be applicable to GPF as well: CBDT chairman

Budget 2021-22 has rationalised tax-free income on provident fund contribution by high income earners by making the exemption on interest income earned on annual contribution to ₹2.5 lakh applicable to all provident funds, Mody said in an interview.

According to the Central Board of Direct Taxes chairman, the new provision, which will be applicable for contributions made from April 1, 2021, would not affect most provident fund subscribers.(Mint)

The Budget provision that makes interest on employee contributions exceeding ₹2.5 lakh a year to the Employees’ Provident Fund (EPF) taxable will also be applicable to all government employees covered by the General Provident Fund (GPF), Central Board of Direct Taxes (CBDT) chairman Pramod Chandra Mody said.

Budget 2021-22 has rationalised tax-free income on provident fund contribution by high income earners by making the exemption on interest income earned on annual contribution to ₹2.5 lakh applicable to all provident funds, Mody said in an interview.

“Everybody is covered, even GPF [General Provident Fund]. This is also applicable to government officials, including me. The law is equal for everybody,” Mody said.

India has three main provident funds—Employees’ Provident Fund (EPF) for the organised sector, GPF for government employees and Public Provident Fund (PPF) for all resident Indians.

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