Apr 07, 2021
Employees Provident Fund Tax Calculation: Contributing Rs 2.5 or 5 lakh? Here’s how you will be taxed now
Under the Employees Provident Fund (EPF) scheme, an employer has to pay up to 12% of the basic monthly salary towards the fund and the employee has to make an equal contribution towards the fund. On retirement, the employee gets a lump sum amount along with interest for all the contributions made by both the employer and the employee.
Though the limit for contribution by the employer is 12% of the salary, the employee may make voluntary contributions under the scheme in excess of 12%. Till the year 2020-21, as per Section 10(11) of the Income Tax Act, 1961, the interest earned on the contributions made in the EPF scheme was tax-free.