Income from contributions over Rs 2.5 lakh into the Employees Provident Fund (EPF) or any other recognized provident fund account is taxable since 2021. Taxpayers need to separately report the interest accrued in the Provident Fund for which no exemption is available. The Finance Act 2021 amended Sections 10(11) and 10(12) to state that no exemption is allowed for interest income accrued during the previous year in recognized and statutory provident funds, to the extent that it relates to contributions exceeding Rs 2.5 lakh made by the employee after April 1, 2021. Interest income over Rs 2.5 lakh is taxable under the head “income from other sources.” If the employee has contributed to a fund with no employer contribution, the limit increases to Rs 5 lakh. The due date to file the Income Tax Return (ITR) for Assessment Year (AY) 2023-24 is July 31, 2023 for non-audited accounts. Filing the ITR before the due date is advised to avoid a rush and receive refunds early.
Reporting of Provident Fund Income in ITR for AY 2023-24: Income from contributions over Rs 2.5 lakh into the Employees Provident Fund (EPF) or any other recognised provident fund account is taxable since 2021.
According to experts at Taxmann, taxpayers have to separately report the interest accrued in Provident Fund to which no exemption is available.
“ITR forms seek separate reporting of interest accrued on Provident Fund to which no exemption is available,” experts say.
According to Finance Act 2021, no exemption is allowed in respect of interest income accrued during the previous year in the provident fund account on contributions over Rs 2.5 lakh. This rule is effective from April 1, 2021.
Interest income from PF account on contributions over Rs 2.5 lakh is taxed under the head “income from other sources”.
“The Finance Act 2021 has amended Sections 10(11) and 10(12) to provide that no exemption shall be allowed in respect of interest income accrued during the previous year in the recognised and statutory provident fund to the extent it relates to the contribution made by the employee exceeding Rs. 2,50,000 in any previous year on or after 01-04-2021,” experts at Taxmann say in FAQs on ITR filing.
“The interest income accruing in respect of the employee’s contribution over Rs. 2,50,000 shall be taxable under the head of ‘income from other sources’. However, if such a person has contributed to a fund in which there is no contribution by the employer, the limit of Rs. 2,50,000 shall be increased to Rs. 5,00,000. The method for the computation of such interest income has been prescribed in Rule 9D,” they add.
The due date to file Income Tax Return (ITR) for Assessment Year (AY) 2023-24 is July 31, 2023 for taxpayers whose accounts don’t need to be audited. Experts say it is important to file ITR as soon as possible before the due date to avoid a last-minute rush and receive refunds early.