The FY22 budget had imposed an income tax on interest income from subscriber subscriptions in excess of 2.5 lakh a year.
Since income tax returns have to be filed by July 31, this can create problems if taxpayers are unaware of taxable interest income from provident fund contributions.
Under the plan, existing provident fund (PF) accounts with employee contribution over 2.5 lakh should be split into two from April 1, 2022. The Central Board of Direct Taxes (CBDT) had Rule 9D in the Income Tax Rules, 1962, which stipulated that two separate accounts must be maintained within the PF account to record the taxable and non-taxable contributions to the PF together with those paid separate interest.
How this is to be done in detail is still unclear.
The EPFO did not respond to a query from ET about the possible delay.
“Organizations with PF trusts that are subject to withholding tax have started discussing this but are awaiting clarity from the EPFO on how to proceed as segregated accounts are not yet in place,” said Saraswathi Kasturirangan, Partner at Deloitte India . This can be done at the time interest is credited for the previous financial year, he said.
A senior government official told ET that the EPFO is in advanced stages of developing the system and it could take effect any time the pension fund begins accounting for the previous year. Those with a base salary of around 21 lakh or more would fall under this net as their 12% contribution would exceed 2.5 lakh. Voluntary contributions by employees would also be offset against this limit.
https://economictimes.indiatimes.com/news/economy/finance/splitting-of-provident-fund-accounts-may-be-delayed/articleshow/90672201.cms The allocation of pension fund accounts may be delayed