ITR filing 2024: Here's how to maximise income tax savings from Employees' Provident Fund (EPF) account

livemint.com:

The Employees' Provident Fund (EPF) is a well-known retirement savings scheme in India, overseen by the Employees' Provident Fund Organisation (EPFO). Under the scheme, the employer deducts a portion of an employee's salary each month and puts it into a fund that earns interest. This money can be withdrawn after retirement. The employer contributes 12% of the basic salary plus dearness allowance to EPF and deducts another 12% from the employee’s salary; 8.33% of the employer contribution goes to the Employees Pension Scheme (EPS) which earns no interest. 

For example, if your basic salary is ₹60,000 per month and your EPF contribution is Rs7,200 (12 per cent of basic salary), then you can claim a deduction of ₹86,400 (12 x ₹7,200) per annum under Section 80C. This will reduce your taxable income and subsequently lower your tax liability.

Beyond serving as a dependable source of retirement funds, the EPF offers tax benefits to its members, enhancing its appeal as a long-term investment
 

“Employee Provident Fund (EPF), popularly known as the Tax Saving PF, offers a compelling proposition for salaried individuals seeking secure retirement investment. With Section 80C allowing deductions of up to Rs. 1,50,000, tax-free interest accumulation, and complete exemption from income tax upon withdrawal post five years, EPF presents a win-win scenario for investors. Its unique EEE tax advantage, coupled with the assurance of financial security, makes EPF a cornerstone in effective retirement planning," said Abhishek Soni CEO and Co-founder of Tax2win.

Another important benefit of EPF is the tax exemption on contributions, interest, and withdrawal – a triple tax slash that makes a huge deal even out of the piece of padding!