Does interest on interest go in to the Taxable contribution account of EPF

Tax queries 181 views 3 replies

Pradeep

SW Engg

40 Points Joined December 2016

Greetings,
as per the amendment in Budget 2021, Taxable contribution account shall be the aggregate of the following, namely:-
(i) contribution made by the person in a previous year in the account during the previous year
2021-2022 and subsequent previous years, which is in excess of the threshold limit; and
(ii) interest accrued on sub- clause (i)

I understand that the interest from Taxable Contribution account is taxable

But what about the interest on (ii) above in subsequent financial years ? Will that also be included in the Taxable Contribution Account ?

Replies (3)

Prajjwal

422 Points Joined December 2017

Yes, the interest accrued on the taxable contribution account in subsequent financial years will also be included in the taxable contribution account. This means that both the excess contributions made in a previous year and the interest earned on those contributions, including subsequent years, will be considered as taxable contribution account and will be subject to tax.

Pradeep

SW Engg

40 Points Joined December 2016

Thanks for the reply

Pradeep

SW Engg

40 Points Joined December 2016

It looks a bit unfair. It is like from the interest amount that I earned, some amount went to tax (although I would have paid it from my Savings account as normally we wouldn't withdraw the money from EPF account) but still the
interest earned on the entire interest amount is being made taxable in the subsequent years