Sage-Tips

Is interest on GPF taxable?

The government had introduced the change to plug the misuse of the benefit by high-income earners who were making large deposits in the employee provident fund or EPF. Interest earned on the provident fund corpus is tax-free and no tax is levied at the time of withdrawal, making it an attractive investment option.

What is the interest on GPF?

7.1\%
The Budget Division notification said, “It is announced for general information that during the year 2021-22, accumulation at the credit of subscribers of General Provident Fund and other similar funds shall carry interest rate of 7.1\% (seven point one percent) w.e.f. 1st October 2021.”

How is interest calculated on PF tax?

For an employee in the tax bracket of 30 per cent, the interest income on EPF contribution over Rs 2.5 lakh will get taxed at the marginal tax rate. If a person is contributing an amount over Rs 2.5 lakh, say Rs 3 lakh, in a financial year to the EPF scheme, interest will be earned at the rate of 8.5 per cent.

How to become a member of the General Provident Fund?

To become a member of the General Provident Fund, a government employee only needs to invest a certain percentage of their salary The amount for GPF subscription is fixed by the subscriber-only. However, the contribution rate should not be less than 6\% of the total salary of the employee.

What is the interest rate of General Provident Fund?

Currently, GPF earns an interest rate of 8 percent. Once you subscribe to General Provident Fund the money needs to be contributed unless there is a case of suspension. Payment to the GPF is usually stopped 3 months prior to the date of retirement as per the government pension rules. Eligibility Criteria for GPF Account

Is Provident Fund exempted from tax?

1.1 Section 10 (11) and 10 (12) of the Income Tax Act provides an exemption for the statutory provident fund and recognized provident fund respectively. Till 31 st March 2021, the interest credited every year in the Employee provident fund account (EPF) was exempt from tax.

Who can contribute to the GPF account?

Anyone who fulfills the below-mentioned criteria can contribute to the GPF Account: 1 A government employee who is a resident of India 2 General Provident Fund is compulsory for government employees belonging to a certain salary class 3 Any employee of a private sector company is not eligible for the General Provident Fund