New Delhi, March 23
The government on Tuesday raised the deposit threshold limit to Rs 5 lakh per annum in provident fund for which interest would continue to be tax exempt. This would be applicable to those cases where no contribution is made by employers to the retirement fund.
In her Budget presented to Parliament on February 1, Finance Minister Nirmala Sitharaman had provided that interest on employee contributions to provident fund over Rs 2.5 lakh per annum would be taxed from April 1, 2021.
Replying to the debate on the Finance Bill 2021 in the Lok Sabha, she made the announcement regarding raising the limit to Rs 5 lakh in cases where employers do not make contributions to the provident fund. She also stressed that tax on interest on provident fund contribution affects only 1% of the contributors, and the remaining are not impacted as their contribution is less than Rs 2.5 lakh per annum. Referring to the issues raised by various members on higher taxes on motor fuel, Sitharaman said she would love to discuss the issue of bringing petrol and diesel under GST in the next GST Council meeting. — PTI