In the new fiscal year beginning April 1, if the contribution of employees in the predicted fund exceeds Rs 2.5 lakh, it falls under the tax net. Finance Minister Nirmala Sitharaman made this statement during the budget speech of 2021. Investments up to Rs. 2.5 are tax deductible. This is mentioned in the Finance Bill of 2021. If the employer does not contribute, the investment of Rs 5 lakh is also tax deductible.
If the prospective fund deducts 12 percent of the employee’s base salary, another 12 percent is deducted from the employer’s account. Some of the most important issues related to future fund tax.
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In his Budget Speech of 1-21, Finance Minister Nirmala Sitharaman said that high income earners have proposed to limit the employees to Rs 2.5 lakh per annum to further improve tax avoidance.
2- In the event that the employer does not contribute, there is a tax deduction of up to Rs 5 lakh.
3- This new change has a direct impact on high income people. Any person with income above Rs 20.83 lakh is taxed on their EPF contribution. About 7 percent will be affected by the decision.
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4- After this change, more than 12 per cent of those contributing will also be affected.
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