Table of Contents
Is there any limit for VPF contribution?
Voluntary Provident Fund (VPF) aka Voluntary Retirement Fund is the voluntary fund contribution from the employee towards his provident fund account. This contribution is beyond the 12\% of contribution by an employee towards his EPF. The maximum contribution is up to 100\% of his Basic Salary and Dearness Allowance.
Is VPF taxable in new regime?
The Voluntary Provident Fund (VPF) is one of the tax-saving investments covered under Section 80C of the Income Tax Act, 1961. It offers tax deductions of up to Rs 1,50,000 a year and taxpayers can save up to Rs 46,800 a year in taxes. There is no need to maintain a sperate account for the VPF investment.
What are new PF rules?
The Central Board of Direct Taxes (CBDT) has notified new rules that specify how the interest on the provident fund contribution of an employee over a certain threshold will be taxed. As per the notification, issued on August 31, contributions above ₹2.5 lakh in the Employee Provident Fund (EPF) per year will be taxed.
Can I have two provident fund accounts?
A member should have only one UAN having all his EPF accounts linked to it. EPF accounts are non-transferrable in case of different employees. However, an employee having two UANs can get his EPF account transferred from one to another and get his previous UAN deactivated.
How is tax calculated on VPF?
VPF interest rate hovers around the 8.5\% per annum mark annually and the returns so generated are tax exempt as well….How to Calculate Interest on VPF?
| Month | Opening Balance (Rs.) | Interest (Rs.) [(Opening balance x VPF interest rate) / 1200] |
|---|---|---|
| May | 6550 [(20\% x 30000) + (3.67\% x 15000)] | 46 |
| June | 13,100 | 93 |
| July | 19,650 | 139 |
| August | 26,200 | 186 |
How is VPF calculated?
To calculate the monthly rate of interest of VPF, it is divided by 1200 and then multiplied by a month’s opening balance. Example: Ranjan joined Company XYZ for a salary of Rs. 30,000 on 1st April 2020. As per the EPFO mandate, his contribution to his EPF account is 12\% of his salary.
Is GPF interest taxable Budget 2021?
1. The Government had capped the tax-free interest earned on provident fund contribution by employees to a maximum of Rs. 2.5 lakh in a year vide Budget 2021-22. 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.
How much should an employee contribute to the VPF?
Employees can contribute up to 100\% of their basic salary and dearness allowance towards the scheme. The VPF interest rate is similar to the EPF scheme. It is not mandatory for employers or employees to contribute to the VPF.
What is the VPF (voluntary provident fund) scheme?
Under the VPF (Voluntary Provident Fund) scheme, employees are allowed to make contributions towards their provident fund account on a voluntary basis. The scheme is also called the Voluntary Retirement Fund scheme. The scheme does not include the mandatory 12\% that the employee makes towards the Employees’ Provident Fund ( EPF ).
What is the new provident fund tax in 2021?
1. The Union Budget 2021 has proposed taxing the income on provident fund contributions of over Rs. 2.5 lakh a year. As per clause 5 of Finance Bill 2021, the interest on any contribution above Rs 2.5 lakh by an employee to a recognized provident fund will be taxable from 01 April 2021. 2.
What is an unrecognized Provident Fund (RPF)?
Recognized Provident Fund ( RPF) – This fund is recognized by the Commissioner of Income-tax according to the rules and provisions contained in the Income-tax Act. A fund that is not approved by the Commissioner of Income Tax is considered an unrecognized provident fund.