Returns will be more than Fixed Deposit

India News  : Returns will be more than fixed deposits even after paying tax on PF interest.

Finance Minister Nirmala Sitharaman has recently made a provision to bring the Provident Fund (PF) of employees in the tax net in the budget of 2021-22 presented in Parliament recently. Under this, interest will be treated as income if you deposit more than two and a half lakh rupees in PF Contribution in a financial year. This means that income tax will have to be paid on interest. However, even after this provision of the government, the bank will get higher returns than the fixed deposit (FD) in the PF.

Chartered Accountant (CA) Harigopal Patidar says that the intention of the government is to tighten up people who get fat salaries and get more returns by depositing more in PF. Therefore, a limit of Rs 2.5 lakh per annum has been fixed for the first time in PF. However, if you look at the interest and PF interest rate on back FD, then it is still attractive in terms of investment. CA Vikas Aggarwal says that the government was already keeping an eye on the high salaries. The government was also paying higher interest due to higher PF and this had an impact on the low paid people. So last year, the government had fixed the limit of PF contribution to Rs 7.5 lakh. The amount deposited above was taxed. Now interest has also been taxable.

FD Interest Rates :

If you make a fixed deposit (FD) of 50 thousand rupees in the bank, then it gets an average interest of 5 percent for a year. This amount will be 2500 rupees. While PF will get an interest of Rs 4075 on it. Even after paying the maximum rate of interest i.e. 31.2 percent tax, you will get Rs 2804. That is, you will get the benefit of Rs 304.

The new rule is only for the contribution portion of the implements. Employer contributes 12 percent of his basic salary in PF for his employees. This portion is still kept out of the purview of tax. For example, if your basic salary is 30 lakh rupees, then the company deposits 360000 rupees from your salary and the same amount from your share in your PF account. The total amount will be Rs 720000. This is more than the 2.5 lakh rule. Since there is an exemption on the part of the employer, only Rs. 360000 will be covered under the new rule. Of this, additional interest of Rs 90000 after Rs 250000 will be your taxable income. On the other hand, if you are retiring this year, then only the portion with deposits of more than 2.5 lakh rupees will be taxable in the current year. The remaining discounts will be the same as before.

EPF has more than 4.5 crore contributory accounts. Of these, 1.23 lakh accounts belong to fat salaries who contribute crores of rupees to them every month. His total contribution is Rs 62500 crore and the government has to pay interest at the rate of 8.50 percent. This interest is completely tax free. EPF is for salaried class people with low and middle income but high salaried persons are taking advantage of this. Therefore, the current move of the government is to remove inequality among the contributors and prevent high income people from misusing it. Government sources have not given the names of these fat salaried people, but more than Rs 103 crore has been deposited in the account of one of them. There is more than 86 crore rupees in the account of the second number of contributors. There is a total of Rs 825 crore deposited in the accounts of such top 20 rich contributors. Talking about such top 100 rich contributors, there is more than 2000 crore rupees in their accounts.