The central authorities is mulling over elevating the restrict for tax-free contributions within the provident fund (PF) for all salaried staff to as much as ₹ 5 lakh every year, reported Hindustan Times.
The transfer will deliver all salaried professionals at par with authorities staff.
“Several representations have been obtained in varied ministries and departments to make this provision equitable and non-discriminatory and in addition to reinforce the restrict as this is among the best social safety mechanisms. It is being thought-about,” the information portal quoted folks accustomed to the matter.
Another individual quoted by HT stated: “For all sensible functions, significantly for private-sector staff, each worker and employer contributions are a part of the negotiated wage, which is named cost-to-company (CTC). The employer’s contribution is all the time a part of this CTC. Hence, there’s a case for consideration.”
The Union finance minister had in funds 2021 introduced capping of tax-free annual PF contributions to ₹ 2.5 lakh for availing tax-free curiosity earnings.
However, it later raised this restrict to ₹5 lakh for such funds the place employers don’t contribute, in a call that benefited solely authorities staff.
Some tax professionals and PF specialists had referred to as the modification “discriminatory”.
“Following Budget 2021, the federal government introduced an additional modification during which it doubled the brink restrict of contribution from ₹2.5 lakh to ₹5 lakh for tax-free curiosity earnings if the PF contribution is made to a fund the place there is no such thing as a contribution by the employer,” stated Archit Gupta, founder and chief government of tax consultancy agency Clear.
“Hence, the federal government has supplied aid for contributions made to the General Provident Fund (GPF), a facility which is obtainable solely to authorities staff, and the place there is no such thing as a contribution by the employer. Hence, for presidency staff, the cap for tax-free curiosity earnings is ₹5 lakhs,” added Gupta.
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