Splitting of provident fund accounts could also be delayed

The Employees’ Provident Fund Organisation (EPFO) hasn’t but been in a position to 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, consultants stated. 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 yr, 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 yr.

Since income-tax returns are required to be filed by July 31, this may occasionally create points if taxpayers are usually not 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 Revenue-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 a scarcity of readability on the main points of how that is to be achieved.

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 learn how to go about it as segregated accounts are usually not but in place,” stated Saraswathi Kasturirangan, accomplice, Deloitte India. This may increasingly occur on the time of crediting of curiosity for the earlier fiscal, he stated.

A prime authorities official instructed ET that the EPFO is in superior phases of growing the system and it might be efficient anytime because the retirement fund physique begins accounting for the earlier yr. These with a primary wage of about ₹21 lakh or extra would fall underneath this web as their 12% contribution would exceed ₹2.5 lakh. Voluntary contributions by workers would even be counted towards this restrict.