Union Finance Minister Nirmala Sitharman on Tuesday increased the deposit limit in the provident fund for which no tax will be charged to Rs 5 lakh per annum if there is no employer contribution.
The Budget 2021-22 had proposed that interest on employee contributions to provident fund over Rs 2.5 lakh annually would be taxed from 1 April 2021. The minister, who was replying to the debate on Finance Bill 2021 in Lok Sabha, said that the bill has introduced with some changes which were focused largely on ease of doing business and compliance burden.
“I think this (limit of Rs 2.5 lakh) was responded to even during the budget discussion. I had said that this Rs 2.5 lakh covers the majority of the people who invest money here. Through the government amendment that I am bringing now, I intend to raise this limit to Rs 5 lakh in those cases where there is no contribution by the employer to that fund,” she said.
Sitharaman said some people were going for a contribution of Rs 5 crore annually and the limit has been set keeping in mind that small and medium taxpayers are not affected.
The Finance Minister also said there will be no change in the rate of income tax. “This is a point on which even as the budget was being prepared, the Prime Minister was clear that we are not going to generate resources by raising the
tax to meet the contingency which is arising out of coronavirus,” the minister said.
Several Opposition members pointed to high prices of petrol and diesel and said the petroleum products should be brought under Goods and Services Tax (GST) Council. The minister said that the Centre is open to discussing the idea in the GST Council meeting.
“The Centre also taxes and the states also tax. If there is this concern about the fuel tax, I honestly think based on today’s discussion—many of the states would be watching this and in the next GST Council if that discussion comes up, I will be glad to have it on the agenda and discuss it,” Sitharaman said.