EPF Interest Taxation - when to show - on withdrawl or every year?

Sirs,

For person employed in a private company with employee contributions to EPF more than 2.5L, the recent tax changes make the interest portion taxable in the hands of the employee and the EPFO does TDS as well on the same (if interest is above 5000). I have the following question:

1. The taxable interest portion should it be offered for taxation every year in the ITR or should it be offered only in the year in which the funds are paid out by EPFO to the employee (withdrawl/retirement etc)?

2. In ITR-2, income from other source -> interest , where should the taxable interest be offered: is it section 10(11) provision 1 or 10(12) Provision 1?

Thanks!

 

 

Replies (3)
Quick Summary
This discussion clarifies the tax implications for EPF interest when employee contributions exceed £2.5 lakh annually. The key question is whether the taxable interest portion should be declared in your Income Tax Return (ITR) each year as it accrues, or only when you eventually withdraw the funds. The consensus suggests it needs to be offered for taxation annually, regardless of withdrawal.

Interest paid or payable or accrued on epf contributions in excess of 2.5 lakhs are required to be offered to tax in the year during which the epf contributions exceeds 2.5 lakhs

Sir,

Thanks for your reply. If I understand correctly, you're saying it has to be offered irrespective of whether the employee withdrew/retired.

Any idea about which section in Other Income?

I'm guessing this 10(12) Provision 1 - correct?

 

10(12) Provision 1

Read more at: https://www.caclubindia.com/forum/epf-interest-taxation-when-to-show-on-withdrawl-or-every-year--601620.asp

 

Can someone please provide clarification?

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