Taxation of EPF interest income: What you should know

Personal Finance

EPF is a retirement savings scheme backed by the government and administered by the Employees’ Provident Fund Organisation (EPFO).

Interest earned on EPF is taxable and the applicable rate depends on the total taxable income of the taxpayer.

TDS is applicable at the rate of 10% on the interest earned on the EPF account if the interest amount is more than 50,000 in a financial year.

Taxpayers can avail the tax benefit on the EPF interest amount by submitting Form 15G/Form 15H to the income tax department.

The TDS deducted from the interest amount can be claimed as a tax deduction against the applicable income tax slab.

Individuals with total taxable income of up to 2.5 lakh, the interest earned on EPF is exempt from tax.

For individuals with total taxable income of more than 2.5 lakh, the interest earned on EPF is taxable at the applicable slab rate.

EPF is a tax-free investment option wherein the employee contributes a certain portion of his/her salary to the EPF account and is matched by the employer.