The Finance Ministry has agreed to carry out the recommendation made by the Labour and Employment Ministry for raising the Income Tax exemption limit on the annual interest rate for the Employees' Provident Fund from 8.5 per cent to 9.5 per cent for 2010-11.
The Ministry issued a notification in this regard a few days ago, matching the interest rate on the PF with a commensurate income tax exemption limit. This means that the 4.71 crore subscribers of PF accounts need not pay any income tax for the interest earned for their savings for the year 2010-11 though the rate of interest payable to them had been increased in September last, after a gap of five years.
The latest notification of the Ministry supersedes its August 2010 order wherein it had notified a tax exemption on income from PF interest of up to 8.5 per cent from September 1, 2010, onwards. The decision had cost an additional Rs.1,700 crore to the Employees Provident Fund Organisation, which managed PF accounts.
ADVERTISEMENT