No tax on additional interest on EPF money (diff. of 9.5 and 8.5 %)
The additional quantum of interest on Employees Provident Fund deposits would be exempted from income tax, the LokSabha was informed today. The provident fund trustees had on September 15 decided to raise the EPF interest rate by 1% to 9.5 for 2010-11.
However as per income tax rules interest on EPF is exempted only upto 8.5 % only .so as per present rule though the interest payable is 9.5% but interest exempted is only 8.5% means additional 1 % is taxable in employee’s hand .But now in Lok sabha Govt has declared that in rate given in income tax for exemption for interest on EPF will also be increased to 9.5 %
"The matter has been discussed with Finance Ministry and they have informed that they will revise the notification to 9.5% once it is approved by the Government," Minister of State for Labour and Employment Harish Rawat said in a written reply. The decision taken by the Central Board of Trustees of EPF to raise the interest rate would benefit 4.71 crore employees in both public and private sectors.