Tax calculation method for PF contribution above 2.5 Lakh

J S BHAVSAR (CONSULTING) (1288 Points)

20 August 2021  

As per Finance Act, 2021 interest accruals on the excess of employee's own annual contributions over Rs 2.5 lakh to EPF and Voluntary PF made post-April 1, 2021 are now taxable.

Suppose employee EPF + VPF per year outgo is Rs 3 Lakh. This leads to Rs 50,000 excess deposit. 

How will the interest of Rs 50000 get calculated, then get offered as additional income and then get taxed?