The Department of Finance has issued a circular regarding General Provident Fund (GPF) deductions.

This is important news for job seekers.  The Department of Finance has issued a circular regarding General Provident Fund (GPF) deductions.

Now adding more money to a PF account can be expensive. The income tax department will levy tax on deducting excess amount in the account. GPF deductions above Rs 5 lakh will be taxable. GPF deduction has been circulated by the Finance Department. The Finance Department has issued a circular regarding the 2021 amendment of the New Income Tax Rule. The GPF deduction will be taxed by the Revenue Department of the Government of India. 

According to the new order, interest will be levied on government employees who deduct GPF above Rs 5 lakh. The government has implemented the Income Tax Rules, 2021. The maximum tax-free contribution limit in GPF has been applied up to Rs 5 lakh. If the employee has deducted on this, the interest income will be treated as income.

It may be mentioned here that Finance Minister Nirmala Sitharaman has allocated Rs. A limit of Rs 2.5 lakh was imposed on tax-free contributions. The General Provident Fund then imposed a tax-free limit on government employees. This limit is Rs. 5 lakhs per annum. This deduction will start from 1st April 2022.

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