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PF interest on taxable portion

Sri77 (Others) (52 Points)

05 July 2024

Hi,

For FY 2022-23, my CA had calculated the interest that would be payable by EPFO and reported in ITR2 (AY 2023-24) and paid tax as well.

However, EPFO paid the interest only in FY2023-24 and is reflecting in 26AS. It has also deducted TDS. For this amount, I have already paid tax. How to avoid double tax?

Should we take extra pain to calculate the interest ourselves? Can we wait till EPFO credits and pay tax for the amount in the corresponding AY in which payment is made?

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6 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177852 Points)
Replied 05 July 2024

Need to wait and file ITR based on AIS data.

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Sri77 (Others) (52 Points)
Replied 11 July 2024

As per my CA, Tax on taxable PF interest has to be paid on accrual basis even though EPFO deposits it late (in the subsequent financial year). Apparently Form 71 helps in claiming the TDS deducted in subsequent years when taxpayer has already reported and paid tax in previous year. Found following article in this website on Form 71: https://www.caclubindia.com/articles/clarity-on-tds-refund-process-form-71-addresses-absence-in-form-26as-for-income-booking-50901.asp

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (177852 Points)
Replied 12 July 2024

Yes, that is an option, you can submit form 71 every year.

Sri77 (Others) (52 Points)
Replied 21 July 2024

To avoid the complication of filing Form 71 every year, can the following be done:

1) In FY 2022-23, PF taxable interest income was accrued and offered in return and income tax paid.

2) In FY 2023-24, EPFO credited actual interest and deducted TDS. So, file form 71 and claim the deducted TDS.

3) In FY 2023-24 return, don't show the taxable PF interest income that was already offered in FY2022-23 return and for which tax is paid already even though it appears in 26AS. If I show it again in FY 2023-24, tax will be paid two times (even if TDS claim through Form 71 is refunded).

Also, don't show the accrued taxable PF interest in FY 2023-24 returns to avoid filing Form 71 every year.

4) In FY 2024-25, EPFO would pay interest, do TDS and will reflect in 26AS of FY 2024-25. Then show that income in the returns of FY 2024-25.

Do you see any problem in this?

Regards

Sri