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PF threshold limit raised to Rs 5 lakh for tax-free interest where there is no contribution by employer

PF threshold limit raised to Rs 5 lakh for tax-free interest where there is no contribution by employer

Finance Minister Nirmala Sitharaman on Tuesday raised the limit for tax exemption on interest earned on provident fund contribution by employees to Rs 5 lakh per annum in specified cases as against Rs 2.5 lakh proposed in the Budget.

In her Budget for 2021-22, Sitharaman had capped the tax-free interest earned on provident fund contribution by employees and employers together to a maximum of Rs 2.5 lakh in a year in an attempt to dissuade high earners from parking their surplus in what is supposed to be common man's retirement fund.

Replying to a discussion on the Finance Bill 2021 in Lok Sabha, the minister said the tax-free limit is now being amended to a maximum of Rs 5 lakh per annum

 

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