New income tax laws that will split existing provident fund accounts


Posted on 02 September 2021


For Illustration Purpose Only.

The government has announced new income tax laws that will split existing provident fund (PF) accounts into two separate accounts, allowing the government to tax PF income generated from employee contributions that exceed 2.5 lakh per year. The guidelines have been published by the Central Board of Direct Taxes (CBDT), and separate accounts inside the PF account must be kept. All existing employee provident fund (EPF) accounts will be divided into taxable and non-taxable contribution accounts as a result. Their closing account as of March 31, 2021 will be included in the non-taxable accounts. On August 31, the Finance Ministry announced the new guidelines, and the Income Tax Department was alerted shortly after. According to official sources, these laws are expected to take effect in the following fiscal year, on April 1, 2022.


Key Points


  • The government has announced new income tax laws that will split existing provident fund (PF) accounts into two separate accounts, allowing the government to tax PF income generated from employee contributions that exceed 2.5 lakh per year.

  • According to official sources, these laws are expected to take effect in the following fiscal year, on April 1, 2022.

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