EPFO is not tax free, tax is levied on the money deposited in your account too, know these rules 

Khabar TV (Bureau). Whenever 20 or more employees work in a company, it is very important to get those employees registered with the Provident Fund Organization (EPFO money withdrawal). 

Due to which PF of the people working in the company is deducted every month. As soon as any person starts working, he is provided a Universal Account Number (EPFO UAN) from EPFO. 

Actually, your employer opens a PF account under this UAN number, in which both you and your company have to contribute every month. 

Most people also believe that no tax has to be paid on withdrawing money from EPFO ​​account (EPF account number). But this information is not completely true. Let us tell you, in some circumstances, account holders may have to pay tax on withdrawal (EPF withdrawal tax). Let us know about these rules in detail. 

In these situations, no tax will be levied

Let us tell you that if you withdraw money after contributing to EPF for five years, then the EPF account holder does not have to pay any tax (EPF account interest rate). Now in these five years, whether you have worked in one company or in many companies, it does not matter.

These people will not be taxed,

but if you have not worked for five years and withdraw the money deposited in the account, then you will have to pay tax. Also, let us tell you that in some circumstances, tax exemption is available on withdrawing money before five years (EPF account tax benefits). In which, if the employee loses the job due to poor health, closure of the employee's business or other reasons, then tax is not levied in these reasons.

These tax benefits are available on EPF 

On the part of the employee, the contribution made can be deducted under Section 80C of the Income Tax Act, 1961. However, its upper limit is Rs 1.5 lakh. On the part of the employer, contribution up to 12 per cent of the employee's salary (EPF account activation) is tax free.

How is EPF taxed?

After the amendment made in the Finance Act 2021, any interest earned on EPF contributions above Rs 2.5 lakh will be taxable. 

However, if the employee is only making EPF contributions (EPF account KYC) and the employer is not, then the upper limit of non-taxable interest amount increases from Rs 2.5 lakh to Rs 5 lakh.

Also, any interest earned above 9.5 per cent per annum on the taxable amount will also be taxable. When it comes to employer's contribution, any amount above Rs 7.5 lakh will be taxable under Section 17(2)(ia) under Rule 3B of the Income Tax Rules.

If an employee receives a lump sum amount from EPF, it will not be taxable under Section 10(12) of the Income Tax Act, 1961, provided the employee has completed five or more years of continuous service.

In these circumstances, you will get strong tax exemption (PF account tax exemption) 

The employee was dismissed from service due to ill health.

Closure of the employer's business.

The employee takes up a job elsewhere and the EPF balance is transferred to the new employer.