EPF interest income: Govt weighing requests for tweaking tax norms
The government may consider proposals for changing norms for taxability of interest income earned by subscribers of Employees’ Provident Fund Organisation (EPFO), a senior official said. The Finance Ministry will also clarify doubts on the applicability of the new tax deduction at source (TDS) provision regarding benefits or perquisites received in a business or profession.
“EPFO circular (on TDS) is one issue which is under our consideration. People have requested that it should be on withdrawal basis and not accrual basis. This is under consideration of the government. I can’t say much on that. These are one of the many issues are being discussed regularly,” Joint Secretary in the Finance Ministry Kamlesh C Varshney said on Wednesday.
“This is one area where nobody was paying taxes despite receiving benefits and perquisites in the course of business and profession … we are going to clarify the practical difficulties before July 1,” he said, interacting with members of industry body Assocham.
The Budget FY23 introduced taxing interest income on contributions made to the EPF beyond Rs 2.5 lakh (for private employees) and Rs 5 lakh (for government employees). It also brought in a new Section 194R in the Income-Tax Act that requires deduction of tax at source at the rate of 10 per cent, by any person, providing any benefit or perquisite, exceeding Rs 20,000 in a year to a resident, arising from the business or profession of such resident. The provision comes into effect from July 1.