Enjoy PF Interest @9.5% tax free

Millions of PF account holders got a bounty of 9.5% interest for the year 2010-11. However there was a lack of clarity on the taxability of the Interest over 8.5% as the finance ministry had notified a interest exemption on PF deposits @8.5%.

 

In its notification No. 24/2011 dated 13th May,2011, the ministry of finance has revised the rate of interest notified under rule 6(b) of Part A of IVth Schedule to the Income tax act,1961 to 9.5%.

This clears the way of tax exemption on Interest Income from PF deposits @9.5% for the financial year 2010-11.

61 comments:

investment said...

pf for sure is a great saving option but an interest rate of 9.5 percent has made it a reasonable investment option as well

Anonymous said...

Is there any limit on maxium investment that a person can do in VPF ? My company allows me to opt for VPF(Voluntary provident fund) as much as 96% of my basic salary. Will I get income tax free interest for whole amount of VPF and the empoyer contribution of PF.

Rajesh Soni said...

Hi Anonumous,
You can contribute 100% of your basic towards VPF. Yes, you would enjoy all the benefits that you enjoy for normal PF contribution except that you would NOT receive matching contribution from your employee on your VPF contributions.

Life insurance said...

Definitely it's a reasonable investment option. Can anybody pls post some more detailed information on it??

sri said...

Ya , Even i have plannned to invest in PPF so that i can reduce my taxable amount
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Certified Financial Planner said...

In 2011, companies used to add the amount of money as PF. For example, if Rs 1200 is deducted from the employee's salary as PF, then RS 1200 is added by company also to make it Rs 2400 in employee's PF. But I have heard, companies are no more adding from their side. If a person wants PF, the total Rs 2400 is deducted from his salary.
Is it true??

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Sriraksha Financial Planning Services said...

This is good news. For both new investors and those who have a PPF a/c for some years now and a significant accumulated balance.This makes the PPF,which is already one of the best avenues for investment in terms of rik,returns and tax effeciency,even more attractive.

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Hi Rajesh Soni you have given good news to the readers through your this post that employee can now Enjoy PF Interest @9.5% tax free.

It has been proved by in its notification No. 24/2011 dated 13th May,2011, the ministry of finance has revised the rate of interest notified under rule 6(b) of Part A of IVth Schedule to the Income tax act,1961 to 9.5%.

This clears the way of tax exemption on Interest Income from PF deposits @9.5% for the financial year 2010-11.

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Manoj Singh said...

Good news for PF account holder.

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