Budget 2021: Shock to high salaries! PF will be taxed if more than 2.5 lakh

 

Budget 2021: Shock to high salaries! PF will be taxed if more than 2.5 lakh



The government has given a jolt to people working in high positions in big companies and government jobs. The government has proposed in the budget (Budget 2021) that if an employee deposits up to two and a half lakh rupees annually in his EPF, then he will have to pay tax on the interest received on it. 

New Delhi:  If you invest more in Provident Fund (EPF) to save money, then this time you may be disappointed with the budget ( Budget 2021 ). The government has ended the tax free EPF facility in the budget this time.

TAX WILL BE DEDUCTED ON DEPOSITING EPF ABOVE 2.5 LAKH ANNUALLY  

If your  EPF  becomes more than 2.5 lakh rupees within a year, then you will now have to pay tax on the interest received on it. At the same time, interest on EPF up to Rs 2.5 lakh will still be tax free. This announcement of the government made in the budget will make a direct difference to companies and people working on high salaries in government jobs. 

TAX-FREE EPF FACILITY FOR HIGH-PAID PEOPLE ENDS

According to the information, people with higher wages used to get the amount deposited in their EPF to increase tax free income. But now the government has abolished this exemption for them. This initiative of the government will not affect lakhs of people working on normal wages. 

A PROPOSAL HAS ALREADY COME ONCE BEFORE

According to the information, the government had made a similar proposal in the budget of 2016. According to that proposal, interest earned on 60 percent of EPF was brought under the tax net. After the people opposed this proposal, the government withdrew its steps on it. 

ULIP PROVISIONS WERE ALSO CHANGED

In this budget, the government has proposed to remove the tax exemption on premium of more than 2.5 lakh rupees in a year under Section 10 (10D) of ULIP. This proposal will not apply to existing ULIPs. This proposal has been brought for the policy sold after 1 February in the country. 

THE NEW WEDGE CODE WILL BE APPLICABLE IN THE COUNTRY FROM APRIL 1

According to the provisions of Budget 2021, a new wedge code is also going to come from April 1 this time. It stipulates that basic salary should be at least 50 percent of a person's total income. This means that the structure will change with more basic salary and in such a way your contribution to EPF will also increase automatically. 



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