Splitting of provident fund accounts could also be delayed

The Employees’ Provident Fund Organisation (EPFO) hasn’t but been capable of break up subscriber accounts into two for members who contributed greater than ₹2.5 lakh final fiscal, which can create tax issues and submitting points, specialists mentioned. The EPFO is prone to break up accounts solely on the time of crediting the curiosity for FY22, which typically occurs between September and December of the next fiscal 12 months, they added. The EPFO had declared an rate of interest of 8.1% for FY22 at its central board of trustees assembly final month.

The price range for FY22 had imposed income-tax on curiosity earned on subscriber contributions of greater than ₹2.5 lakh a 12 months.

Since income-tax returns are required to be filed by July 31, this will likely create points if taxpayers aren’t conscious of the taxable curiosity earned on provident fund contributions.

As per the plan, present provident fund (PF) accounts with an worker contribution of over ₹2.5 lakh have been to be break up into two from April 1, 2022. The Central Board of Direct Taxes (CBDT) had inserted Rule 9D within the Earnings-Tax Guidelines, 1962, which specified that two separate accounts throughout the PF account shall be maintained to segregate the taxable and non-taxable contributions to PF together with the curiosity paid.

There’s nonetheless an absence of readability on the main points of how that is to be finished.

The EPFO didn’t reply to a question from ET on the doable delay.

“Organisations with PF trusts, which have the duty of withholding tax, have began discussing it however await readability from the EPFO on find out how to go about it as segregated accounts aren’t but in place,” mentioned Saraswathi Kasturirangan, companion, Deloitte India. This will likely occur on the time of crediting of curiosity for the earlier fiscal, he mentioned.

A prime authorities official instructed ET that the EPFO is in superior levels of growing the system and it may very well be efficient anytime because the retirement fund physique begins accounting for the earlier 12 months. These with a fundamental wage of about ₹21 lakh or extra would fall below this internet as their 12% contribution would exceed ₹2.5 lakh. Voluntary contributions by staff would even be counted towards this restrict.