Provident Fund (PF) rules are going to change from April 1, 2022. This will have a direct impact on your pocket. From the new financial year, if you invest more than Rs 2.50 lakh in the PF account, then tax will have to be paid on its interest. Finance Minister Nirmala Sitharaman had announced the imposition of tax on investments above Rs 2.50 lakh in PF in the Union Budget.
The Central Board of Direct Taxes (CBDT) has also issued a notification in this regard. Under this, if you contribute more than 2.50 lakh to your PF account in a year, then tax will have to be paid on the interest income earned on it. For government employees, this limit is Rs 5 lakh. Investment in PF account gets tax exemption under section 80C of the Income Tax Act.
Calculation of tax will be easy
If the annual contribution of a salaried worker in the PF account is more than 2.50 lakhs, then two separate accounts will be created. 2.50 lakh will be deposited in the first PF account, while the amount above that will be deposited in the second account. This will made tax calculation easier.