Lucknow: Employees of the UP government will not be able to deposit more than Rs 5 lakh in a year in their General Provident Fund (GPF) account. For this, the government is going to amend the General Provident Fund Rules. The government has prepared the proposal. It is going to be placed before the cabinet soon. The final decision is going to be taken from there.
The old pension scheme has also been implemented in the state for government employees appointed before April 1, 2005. GPF facility is there for them only. It has also been made mandatory to deposit a minimum 10 percent of the employee's basic salary in his GPF account every month. However, there is no limit on the maximum. At present, about 7 lakh government personnel are being covered under the GPF scheme in the state.
Earlier the amount deposited in GPF was not coming under the tax net of the Income Tax Department, but under the new rules applicable from April 1, 2022, more than 5 lakh deposits in GPF in a financial year will have to pay tax. That is, the amount in excess of 5 lakhs will be treated as taxable in the same way as income from other sources.
Sources in the government say that due to changes in income tax rules, there is a need to amend the General Provident Fund Rules in UP as well. Till now all the employees used to deposit much more than the prescribed minimum limit of 10 percent in the GPF account. The main reason behind this was that the amount deposited in the GPF account and the interest earned thereon were completely tax-free. Along with this at present, there is more interest in this scheme than FD. Interest is available on GPF at the rate of 7.1 percent, while the interest rate on FD is below this.
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