Tax on EPF interest: How will TDS be applied?
Budget 2021 has left income-tax rates and slabs unchanged. But it found way to tax the rich and super rich by taxing the interest earned on Employee’s Provident Fund (EPF) contributions in excess of Rs 2.5 lakh in a financial year.
While we await further clarifications from the finance ministry on how exactly the interest would be computed and taxed, here’s a glimpse of how it may be operationalised.
What portion of my Employee’s Provident Fund (EPF) contribution is taxable?
Back-of-the-envelope calculations show that if your annual basic salary is close to Rs 21 lakh (Rs 1,73,612 a month, to be precise) or more, you will come under the EPF tax net. Remember, just the interest on the excess contribution will be taxed; not your contribution itself.