02 March 2021
The contribution made by an employer to its employee's provident fund account used to be fully tax free in the hands of the employee without any monetary limit as long as it did not exceed 12% of the basic salary and dearness allowance. However the Finance Act, 2020 has amended the situation and has put an absolute cap of ₹7.50 lakh on the aggregate of contributions made by an employee to recognised provident fund, National Pension System scheme and an approved superannuation fund taken together in a year. Any amount in excess of Rs. 7.50 lakh contributed by the employer to these accounts taken together shall be treated as perquisite in the hands of the employee and will be included in his salary and taxed at the slab rates. Even the interest or income accrued in respect of such excess contribution to these three accounts shall also be included in the value of perquisite of the employee year after year.
My question is above amendment is applicable from which Financial Year ?
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