CBDT and Finance Ministry clarified on 2nd Sep 2021 how the interest above the Rs 2.5 lakh contribution of (EPF + VPF) from employee contributions will be calculated so that the interest gets offered for tax.
Basically, government is saying that under new rules the Provident Fund accounts will be split into two parts:
Account 1) EPF + VPF contribution where employee contributed below Rs 2.5 Lakh per year
Account 2) EPF + VPF contribution if employee has contributed above Rs 2.5 Lakh per year then the extra amount
Now here comes the major confusion, difference and understanding.
Financial year for employee = 1st April 2021 to 31st Mar 2022 (April Salary to March Salary)
but the contributions of employees in EPFO and PF Trusts resonate in 1st March 2021 to 28th Feb 2022 cycle
What actually happens on the ground, that the PF deducted on 31st March every year is not credited to the PF account of employee on 31st March. It is credited on 15th Apr 2021 which is in next financial year.
How should workers find out if they have contributed EPF + VPF above Rs 2.5 Lakhs?
CAclubindia
