PPF interest is tax free every year and is credited in PPF account on 31st March.
a) Does PPF interest get classified as "Exempt Income" as far as ITR is concerned? Why so?
b) If yes, then EPF(Employee Provident Fund) account also receives interest and gets credited. Should EPF interest also get classified as "Exempt Income"?
c) Do we need to report the PPF interest credited in PPF account on ITR-2 if the same is above Rs 5000? Why do we need to report it? What clue does the Income tax department get by knowing only the interest component in the PPF account?
d) Is there any CBDT notification or circular regarding the components that are considered as "Exempt Income" especially PPF interest and or EPF interest?
Please give link to CBDT circular if any.
So far there has been a mixed response whether or not "PPF interest merely credited in PPF account" is actually a Exempt Income to be declared if above Rs 5000. Some professionals have said that such interest is merely credited in account and need not be reported on ITR-2 unless the same is withdrawn in any year. If we dont need to report, then what does ITR-2 - > EI - > Line 1 (Interest Income) get considered for?
Some have said that reporting of the PPF interest is must, but they are all silent on the EPF interest part which is equivalent to PPF interest. Also, many employees have not received PF slips for last three financial years from EPFO because of their shoddy work.
Thus it brings the need to have clarification from CA Community as well as CBDT what constitutes Interest Income as Exempt Income.
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