Tds on employee contr

We have observed that as per section 9D of Income Tax Act 1956 interest receivable in respect of PF deduction in excess of Rs.2,50,000/- is taxable under the head of Income from Other Sources.

 

We are depositing the Provident Fund contribution to EPFO and they have also not declared the rate of interest against PF contribution for the year 2021-2022 till date.

 

We also observed that the rate of interest for the last financial year declared by EPFO after a lapse of 5-6 months of the current financial year. For example the rate of interest for the financial year 2019-2020 declared by EPFO at the end of financial year 2020-2021.

 

We seek your advice on :

 

How to calculate the interest on PF contribution and also how to give effect of income tax of a respective employee for the Financial Year 2021-2022 (Assessment Year 2022-2023).

Replies (3)
Quick Summary
This discussion clarifies the tax implications of employee Provident Fund (PF) contributions, specifically concerning interest earned. According to Section 9D of the Income Tax Act 1956, interest on PF deductions exceeding £2,50,000 is taxable under 'Income from Other Sources'. The delay in EPFO declaring interest rates can complicate tax calculations for the financial year 2021-2022. The thread also touches upon TDS deductions for contract employees under various sections, noting it doesn't apply to salaried staff.

Hi mi Naim kiran

In many cases, companies are deducting TDS on amount paid to such contract employees either under Section 194J or Section 194H or Section 194D. TDS in such cases is normally being deducted at a flat rate of 10%.

TDS deduction applies to professionals, gig economy workers, contract employees, and independent service providers. It does not apply to salaried employees on a Company's payroll.

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