A Retirement saving scheme in which a part of the employees’ income is deposited every month while some part is contributed directly by the employer too is what we know as Employee Provident Fund. It is a safe place to accumulate retirement savings for most salaried employees. There is tax exemption for the employees’ contribution. Added to that, the interest rate is also exempted from tax. Thus, the interest rate continues to grow up to withdrawal.
Therefore, many subscribers continue their Employee Provident Fund Schemes post-retirement. No contributions are made during this period but the interest rate continues to grow. Many people intend to do this as well. Moneymindz, India’s First Free Online Financial Advisory
The Income Tax Appellate Tribunal recently stated that the interest earned in a PF account post-retirement would be taxable. As per Section 10 (12) “The exemption is limited to the accumulated balance due and payable to an employee up to the date of his retirement or end of his employment”.
Thus, the rate of interest earned after retirement is taxable for a retiree. Take note that once you retire, the interest rate earned from the day of resignation till the day of withdrawal is subject to taxation. Moneymindz, India’s First Free On call Financial Advisory
The conclusion here is that even if you retire before the age of retirement, i.e. 60 years of age and hold the EPF money for some more time, that particular amount of interest will be liable to tax.
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