PF Accounts To Be Split Into Two From April 1: 5 Key Points

(5)New Delhi: From April 1, present provident fund (PF) accounts are more likely to be divided into two components. In September final 12 months, the federal government had notified new revenue tax (I-T) guidelines, beneath which the PF accounts will likely be break up into two. The step will enable the Centre to tax PF revenue on worker contributions of over Rs 2.5 lakh yearly.With the brand new algorithm, the Centre goals to forestall excessive incomes individuals from making the most of authorities welfare schemes.Here are the highest 5 takeaways:1) All present PF accounts will likely be divided into taxable and non-taxable contribution accounts.2) The non-taxable accounts will embody their closing account because it stood on March 31, 2021, the Central Board of Direct Taxes (CBDT) had stated. The CBDT frames coverage for the I-T division.3) According to official sources, the foundations might come into impact from the subsequent monetary 12 months, i.e. from April 1, 2023, onwards.4) In order to implement the brand new tax on PF revenue from workers' contributions exceeding Rs 2.5 lakh each year, a brand new Section 9D has been included beneath the I-T guidelines.5) For taxable curiosity calculation, two separate accounts will likely be maintained inside the present PF account in the course of the lately concluded monetary 12 months in addition to all of the previous years, to evaluate the taxable in addition to the non-taxable contribution made by an individual.