Home Mutual Fund Is EPF employer contribution taxable within the revised New Tax Regime?

Is EPF employer contribution taxable within the revised New Tax Regime?

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Is EPF employer contribution taxable within the revised New Tax Regime?


In response to our latest article – Tax deductions out there within the New Tax Regime from 1st April 2023 – a reader desires to know if the employer contributions made to the EPF are taxable within the new tax regime from 1st April 2023.

Employer contributions to the EPF aren’t a part of an worker’s wage. And due to this fact, they’re additionally not a part of 80C. Thus the foundations of the brand new tax regime (present or revised in funds 2023) don’t apply to them.

The employer contributions to EPF will proceed to be tax-free within the new tax regime (present and revised in funds 2023), supplied such contributions are lower than or equal to Rs. 7.5 lakhs in a monetary 12 months. This restrict additionally applies to NPS and superannuation schemes.

If an worker is a part of the EPF, NPS and any superannuation scheme, then the whole contribution mustn’t exceed Rs. 7.5 lakhs for such contributions to be tax-free. Past this, it will likely be taxable as per slab within the arms of the worker.

Employer contributions to the NPS are deemed to be a part of our wage. They’re deducted from the whole wage by way of part 80CCD(2). This deduction remains to be relevant within the new tax regime (each present and revised in funds 2023).

There’s a false impression that this part has no restrict for tax deductions. This isn’t true. The utmost worth below 80CCD(2) is computed as follows. Let A = quantity contributed by the employer in a monetary 12 months. Let B = 10% of earnings from wage*. Let C = Gross Whole Earnings (2). Then the utmost worth permissible below 80CCD(2) is the smallest amongst A, B and C. * For state and central authorities workers, it’s 14%.

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