PF Contributions and PF Holder Account and AADHAAR Role:
Now Government is in active mode and they want to be all PF contributors and holders account should be linked with AADHAAR why???
Last two financial year budgets Finance ministry want to trap higher income side people who contribute While the excess employer contribution above Rs. 7.50 lakh p.a. is taxable u/s 17(2)(vii)side should be treated as income applicable in FY 2020-21.
This will impact high-income salaried people using voluntary provident fund for tax-free interest. Individuals who contribute over Rs 20,833 a month to PF will be taxed.
A study confirm that only few person are getting more and more higher tax free interest from PF.
A person who contributes more amount in PF from his/her savings then He /She can earn interest free amount at higher rate of 8.5% without any tax and if such they do FDR say 5% then they have to pay tax … a below table show difference.
|If Invest in PF||Interest Income @ 8.5%||If invest in FDR’s @ 5.25%||Difference|
|Tax on Income||Nil||1,57,500.00||(1,57,500.00)|
Now Government of India wants to stop these interest free income for those person who fall in category but escape due to they have more than one account say If any person falls in this category but he/she has 2 or 3 three account in PF they are still enjoying tax free income after linked with aadhhar they have to pay more tax which are escaping due to in sufficient machinery.
Now the honeymoon period of higher interest rare earned in PF by higher salaried person on their higher contribution will charge tax.
Government also wants to find false PF account or many persons have more than one. PF account say they do job in Chennai and they have their PF account after that they switch job from Chennai to Pune and now they new PF account both account are running and having deposit and earning interest.
Many of people are getting salary from more than one employer and both are deducting PF and deposit the same but due different account they may not be fall in tax criteria say A employer deducted PF Rs. 12000/- and another B deducted PF Rs. 15000/- now if they have separate PF account they are not fall in PF interest earned taxation criteria but when it linked and show the contributions automatically reflect in their 26AS, hence must have pay tax on PF interest.
Now the June month PF Govt of India gave dead line to employer to link Aadhhar all of your employees, Its must compulsory.