New Income Tax Rules: As per CBDT, there will be no tax applicable on any contribution till 31st march 2021, but after the financial year 2020-21 tax will be applied on interest on the PF account and it will be calculated separately.
According to the new Income Tax Rules set by the government, the existing Provident Fund accounts (PF account) will be divided into 2 parts. The CBDT (central board of direct taxes, Government of India) has issued the official notification related to this. As per the notification, a separate account will be made under the Pf account for the calculation of interest on the provident fund.
As per the new notification, all the existing PF account holder’s accounts will be cut down into two parts- Taxable and non – taxable accounts.
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As per the new notification issued by CBDT, any contribution made till 31st march 2021 are not liable to pay taxes but, After the financial year, 2020-21 the interest earned on PF accounts are will Taxable and calculated separately. There will be separate accounts under the Pf account in the 2021-22 and for all the upcoming years.
As per the notification of CBDT, these new rules will be applicable from April 1, 2021, but if the deposit amount in your account is above Rs. 2.5 Lacs annually, then the interest earned is taxable and you are required to pay income tax.