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The Government of India will pay the employer and employee contribution to EPF account of employees for another three months from June to August 2020. The benefit is for establishments with up to 100 employees and where 90% of those employees draw a salary of less than Rs 15,000 per month. The contribution to EPF is reduced to 10% from 12% for non-government organisations.
Employee’s Provident Fund (EPF) is a government-backed investment cum retirement planning scheme. The employees working in eligible organisations should compulsorily contribute a minimum of 12% of their basic salary on a month-on-month basis. The employer as well contributes with a matching amount. We have covered the following in this article:
Latest updates – Clarification on proposed Section 115BBH in Budget 2022
1. Losses incurred from one virtual digital currency cannot be set-off against income from another digital currency.
2. Infrastructure cost incurred on mining crypto assets will not be treated as cost of acquisition.
Union Budget 2022 Outcome:
1. Income from transfer of virtual digital assets such as crypto, NFTs will be taxed at 30%.
2. No deduction, except the cost of acquisition, will be allowed while reporting income from transfer of digital assets.
3. Loss from digital assets cannot be set-off against any other income.
4. Gifting of digital assets will attract tax in the hands of receiver.Losses incurred from one virtual digital currency cannot be set-off against income from another digital currency.
The EPFO gives an interest rate of 8.1% to subscribers of the Employee Provident Fund (EPF) for 2021-22. It was the lowest interest rate since 1977-78, when the EPF interest rate was 8%.
Voluntary Provident Fund (VPF) is the contributions made by the employees that are over and above the minimum contribution set by the Employees’ Provident Fund Organisation (EPFO). However, the employer will not contribute more than 12% of the basic salary, regardless of how much the employee contributes. Many employees opt for VPF as they don’t have to make any other investments and its easy as the amount is directly deducted from their salary.
The VPF contributions too earn the same returns that the employee’s and employer’s contributions earn. It is for this reason that VPF is considered a very attractive option to invest in. The current interest offered on VPF contributions is 8.5%, which is much higher than that of the Public Provident Fund (PPF). The Government of India, depending on various factors, periodically updates the interest rate offered of EPF.
VPF contributions made towards the EPF accounts are eligible for tax deductions under the provisions of Section 80C of the Income Tax Act, 1951. Hence, you can contribute as much as you want but the tax deductions available to the taxpayers is restricted to Rs 1,50,000 a year and one can save up to Rs 46,800 a year in taxes.
Since VPF contributions are deposited in the EPF accounts of employees, the VPF contributions too will have the same lock-in period as that of the EPF. One can withdraw from their on VPF contributions if he or she is unemployed for more than two months or when they retire.
Making VPF contributions is very simple and straightforward. Like PPF, you don’t need to open an account with a registered bank. All you need is to inform your employer that you are willing to increase your EPF contribution. The employer will then deduct the sum that you wish to invest as VPF from your salary. It is for this reason that VPF is a much better tax-saving option as it offers an attractive rate of returns and is deducted directly from the salary.
Your investment is absolutely safe as the sovereign guarantees back them. What’s more? The EPF account is transferable across all eligible employers and you need to inform your new employer that you are willing to make VPF contributions as well on a job change.
Voluntary Provident Fund is a great option as it offers guaranteed returns and it is deducted directly from the salary. The employees don’t have to look at other tax-saving investment options as VPF itself offers tax deductions, considering they are willing to wait until the lock-in period is over.