Interest on PF deposit above 2.5 lacs

As per new amendment to PF rules, any interest paid on contribution above 2.5 lacs is taxable in the hands of assesses. This seems to be applicable from FY 2021-22.

Now interest for FY 2021-22 has not yet been credited by EPFO, neither has any TDS been deducted on that. This interest gets credited in the month of Feb of next financial year i.e for FY 2021-22, it will get credited in Feb'23. In such a scenario, how do we show interest in the ITR for FY 21-22? Should we wait till interest gets credited and take this income in the year 22-23. 

Replies (3)
Quick Summary
New PF rules mean interest on contributions over £2.5 Lakhs is taxable from FY 2021-22. The interest for FY 21-22 is expected in Feb '23, with TDS to follow. This raises questions about declaring this income in your ITR for FY 21-22. Should you declare it on a due basis or wait until it's credited and TDS is deducted in the following financial year? This discussion explores the implications of each approach.

Either Based on 8.1% interest rate declared for FY 2021-22, calculate the interest on due basis & file return.

Or you will need to revise the return as and when the interest will be declared.

 

TDS is going to come only in the next year...Shouldn't we take income also in that year. Wont we have to show income again in the next year again to claim TDS benefit.

TDS will be deducted for interest paid for FY 2021-22, so it will not be considered in next year, if you have declared it in this year.

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