PF Interest tax exemption

Tax on EPF interest proposed in Budget 2021

Up to ₹2.5 lakh has been kept as the deposit limit for which interest is tax exempt, In this regard please clarify, whether the  employees contribution limit  2.5 lakh applicable to statutory deduction of 12%  or including voluntary contribution. 

Ponnu Narayanan

Replies (1)

Yes, the ₹2.5 lakh limit includes both your mandatory 12% EPF contribution and any extra VPF you choose to contribute. Any interest earned on contributions above this total is taxable.

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