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Government issued notification, now PF accounts will be divided into two parts, know how interest will be calculated?

The Central Board of Direct Taxes (CBDT) has notified income tax rules in which interest income deposited in the Provident Fund (PF) above a certain limit will be taxed.


New Delhi. The central government has notified new income tax rules under which existing provident fund accounts (PF accounts) will be divided into two separate accounts. The Central Board of Direct Taxes (CBDT) has notified income tax rules in which interest income deposited in the Provident Fund (PF) above a certain limit will be taxed. This rule will be applicable to those with a contribution of more than Rs 2.5 lakh in the PF account in a year. According to the CBDT, the existing PF accounts will be divided into two separate accounts to implement the new rule.

What is the new rule?

Under the new rules, the non-taxable PF contribution will have the balance up to March this year and the contribution made by the individual in 2021-22 and previous years, which is not included in the taxable contribution account and which is within the limit . The amount deposited in excess of the limit will be in the taxable contribution account and the interest earned on it will be taxed. The new rules will be applicable from April 1 next year.


Tax free interest limit fixed at 2.5 lakhs. As per the government’s estimate, about 1,23,000 people with more income are getting more than Rs 50 lakh from tax free interest in their provident fund account. In this year’s budget, Finance Minister Nirmala Sitharaman had fixed the tax free interest limit on provident fund contribution at Rs 2.5 lakh. If there is no contribution of the employer in the account of a person, then the limit will be Rs 5 lakh for that.

Parvesh Maurya
Parvesh Maurya
Parvesh Maurya, has 5 years of experience in writing Finance Content, Entertainment news, Cricket and more. He has done BA in English. He loves to Play Sports and read books in free time. In case of any complain or feedback, please contact me @ informalnewz@gmail.com
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