The Central Government has made it mandatory to open two accounts every year for those contributing more than 2.5 lakh to the Provident Fund (PF). This rule has come into effect from April 1.
The Employees’ Provident Fund Organization (EPFO) has not yet been able to divide the PF account of such members in two places. Experts say that EPFO can divide the PF account in two places while depositing interest in the PF account. Generally, interest in PF accounts can be credited between September and December. That is, there may be a delay of six to nine months in dividing such PF accounts in two places.
There may be problem in calculation of tax: EPFO has announced interest rate of 8.1 percent for the financial year 2022. According to experts, delay in bifurcation of PF account of high contributors may create problem in calculation of tax. In the budget of FY 2022, the government had announced to levy tax on interest earned on contribution of more than 2.5 lakhs annually in PF.
In the realm of basic salary above 21 lakhs
According to experts, only those with a basic salary of 21 lakh or more will come under the purview of this new rule. Because their 12.5 per cent contribution is more than Rs 2.5 lakh. However, so far no clarification has come from the EPFO about the distribution of PF account. Both the employee and the employer are waiting for the clarification from EPFO.
Pension accounts can also be opened in Kotak Mahindra Bank
Now pension account can be opened in Kotak Mahindra Bank. For this the bank has got approval from the Central Pension Accounting Office (CPAO). According to an office memorandum of the Ministry of Finance, the CPAO had approved Kotak Mahindra Bank to start disbursement of pension on 23 February 2022. However, the bank will have to follow the guidelines of the scheme.