Big news for EPF account holders, this big change is happening from April 1

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There is going to be a significant change in the rules related to Provident Fund (PF) from the new financial year i.e. April 1, 2022, which will have a direct impact on your pocket. PF is a retirement savings scheme managed by the government for the employees. Under this, employees contribute to the fund every month.An employee investing in PF can withdraw money from the account after retirement. But if an employee wants to withdraw his money from the EPF account before retirement, then there are some important conditions and guidelines for this.In the budget speech for 2021-22, Finance Minister Nirmala Sitharaman had proposed that PF contributions above Rs 2.5 lakh annually would be taxable. The Central Board of Direct Taxes has notified new rules, which explain how interest on provident fund contribution of an employee above a certain limit will be taxed.According to the notification issued on August 31, every year contribution of more than Rs 2.5 lakh to the Employees’ Provident Fund (EPF) will be taxed. For PF accounts on which the employer does not make any contribution, this limit is Rs 5 lakh per annum.Employers contribute 12 per cent of basic salary and dearness allowance to EPF and deduct 12 per cent from the employee’s salary. 8.33 per cent of the employer’s contribution goes to the employee pension scheme, on which no interest is paid.PF new rulesThe existing PF accounts will be divided into taxable and non-taxable contribution accounts.Non-taxable accounts will also include their closing account as its date is March 31, 2021.The new PF rules can be applicable from the next financial year i.e. 1st April 2022.A new section 9D has been inserted under the IT Rules to levy a new tax on PF income.Two separate accounts will also be created in the existing PF account for computing taxable income.

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