New Delhi, Feb 1 In a bid to discourage companies and establishments from delaying the deposit of provident fund (PF) contribution made by their employees, Finance Minister Nirmala Sitharaman on Monday said that late deposit of these by the employer will not be allowed as deduction to the employer.
Presenting the Union Budget 2021-22, the minister on Monday said that the government has noticed that some employers deduct the contribution of employees towards provident funds, superannuation funds, and other social security funds but do not deposit these contributions within the specified time.
For the employees, this means a loss of interest or income, she said, adding that in cases where an employer later becomes financially unviable, non-deposit results in a permanent loss for the employees.
"In order to ensure that employees' contributions are deposited on time, I reiterate that the late deposit of employee's contribution by the employer will not be allowed as deduction to the employer," she said.
The move is expected to bring about compliance among the employers.
In another move, the Finance Minister has proposed to restrict tax exemption for the interest income earned on the employees' contribution to various provident funds to the annual contribution of Rs 2.5 lakh.
The proposal has been made to rationalise tax exemption for the income earned by high income employees.
This restriction shall be applicable only for the contribution made on or after April 1, 2021.
( With inputs from IANS )
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