If your salary has increased and the letter with salary hike has reached in your hands, then you should also take a look at the monthly provident fund i.e. PM (PF) deduction. This is because as per the income tax rules, if the annual EPF contribution of the Employees’ Provident Fund Organization (EPFO) member is more than the prescribed limit, then the EPF interest tax will have to be paid. In fact, the contribution amount in excess of the limit will also be taxable.

What is rule?

According to the income tax rules effective from 1 April 2021, tax will have to be paid on the interest earned on contribution of more than Rs 2.5 lakh annually. Let us tell you that the Finance Minister had taken this decision keeping in mind the high salary employee. However, this rule will not affect those with a monthly salary of Rs 2 lakh.

If an employee has invested ₹3 lakh in his EPF account in a financial year, the interest earned on the additional ₹50,000 contribution will be taxable. Explain that according to its recent notification (dated 15-02-2022) by the Revenue Department, tax will be levied on the interest of government employees who have deducted GPF above five lakh rupees.

The government has implemented the Income Tax (25th Amendment) Rules 2021.Due to this, the limit of maximum tax free contribution in GPF has been implemented to 5 lakhs. If the deduction is made by the employee over this, then the interest income will be considered as income.

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DA Hike: After the increase in dearness allowance by the central government last year, many states are giving the gift of DA hike to their employees one after the other in the new year. Where earlier the Odisha government had decided to hike the DA for its employees, on January 1, 2023, the Tamil Nadu government has increased the dearness allowance from 34 percent to 38 percent, giving a new year gift to its employees.

Chief Minister MK Stalin’s government has increased the dearness allowance of state employees by 4 percent. After this the total DA of the employees has become 38%. After this decision of the Tamil Nadu government, the salary of the employees will increase. According to an estimate, it is estimated to benefit about 16 lakh employees of the state.

Happy with da hike

The employees who will benefit include teachers. Apart from this, relief has also been announced for pensioners. After the increase in Dearness Allowance by the Tamil Nadu government, there will be an additional burden of about Rs 2300 crore on the exchequer. The state government has said that this will improve the standard of living of the employees as well as help in tackling inflation.

New year gift for employees

Let us tell you that this will be a big relief for the employees as well as the pensioners. Before the Tamil Nadu government, Odisha’s Naveen Patnaik government had announced a 4 percent DA hike for its state employees while giving a gift of 2023, before that the Tripura government had also increased the dearness allowance. It may be known that while giving the gift of Diwali, the central government had increased the hike for central employees and pensioners by 4 percent last year.

The post Good News for the employees! Salary has increased so much due to the announcement of dearness allowance. first appeared on Rightsofemployees.com.