Site icon News Bit

Splitting of provident fund accounts may be delayed

The Employees’ Provident Fund Organisation (EPFO) hasn’t yet been able to split subscriber accounts into two for members who contributed more than ₹2.5 lakh last fiscal, which may create tax complications and filing issues, experts said. The EPFO is likely to split accounts only at the time of crediting the interest for FY22, which generally happens between September and December of the following fiscal year, they added. The EPFO had declared an interest rate of 8.1% for FY22 at its central board of trustees meeting last month.

The budget for FY22 had imposed income-tax on interest earned on subscriber contributions of more than ₹2.5 lakh a year.

Since income-tax returns are required to be filed by July 31, this may create issues if taxpayers are not aware of the taxable interest earned on provident fund contributions.

As per the plan, existing provident fund (PF) accounts with an employee contribution of over ₹2.5 lakh were to be split into two from April 1, 2022. The Central Board of Direct Taxes (CBDT) had inserted Rule 9D in the Income-Tax Rules, 1962, which specified that two separate accounts within the PF account shall be maintained to segregate the taxable and non-taxable contributions to PF along with the interest paid.

There is still a lack of clarity on the details of how this is to be done.

The EPFO did not respond to a query from ET on the possible delay.

“Organisations with PF trusts, which have the obligation of withholding tax, have started discussing it but await clarity from the EPFO on how to go about it as segregated accounts are not yet in place,” said Saraswathi Kasturirangan, partner, Deloitte India. This may happen at the time of crediting of interest for the previous fiscal, he said.

A top government official told ET that the EPFO is in advanced stages of developing the system and it could be effective anytime as the retirement fund body starts accounting for the previous year. Those with a basic salary of about ₹21 lakh or more would fall under this net as their 12% contribution would exceed ₹2.5 lakh. Voluntary contributions by employees would also be counted toward this limit.

For all the latest Business News Click Here 

 For the latest news and updates, follow us on Google News

Read original article here

Denial of responsibility! NewsBit.us is an automatic aggregator around the global media. All the content are available free on Internet. We have just arranged it in one platform for educational purpose only. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials on our website, please contact us by email – abuse@newsbit.us. The content will be deleted within 24 hours.
Exit mobile version