September 2024

EPF is a retirement benefits scheme under the Employees Provident Fund and Miscellaneous Act, 1952, where an employee has to pay a certain contribution towards the scheme and an equal contribution is paid by the employer as well on a month on month basis. The Scheme is managed by Employee Provident Fund Organization (EPFO).  The employee gets a lump sum amount including self and employer’s contribution with interest on both, on retirement and during the service period (under certain circumstances as stipulated). The principal amount and the accrued interest are exempt from income tax during withdrawal and thus an attractive retirement plan for the salaried class. The Scheme covers all entities in which 20 or more employees are employed and certain entities are covered, subject to certain conditions and exemptions even if the required 20 staff criteria are not met. EPF Interest Rate 2024 The EPF Interest Rate for 2024 is fixed at 8.25%. This rate is valid for all EPF contribution made from 1st April 2023 to 31st March 2024.  The EPF interest is calculated monthly on the EPF contributions but deposited into the EPF account only on 31st March of the applicable financial year. Thus, the total interest for the year will be credited at the end of the financial year. Interest for the FY 2023-24 is 8.25%. Hence, for every month interest calculation, the interest rate will be considered as 0.688%, i.e. 8.25%/12. An EPF account becomes inoperative or dormant if EPF contributions are not made into an EPF account for a continuous 36 months. EPF interest will be credited to the employees’ accounts until they become inoperative or dormant. However, interest will not be credited to the inactive EPF accounts.  Current & Historical EPF Interest Rates The Interest rate of EPF is reviewed every year after consultation with the Ministry of Finance by EPFO’s Central Board of Trustees. The PF interest rate of 2024 is fixed at 8.25%. Provident fund Interest rates for the last five years are mentioned below: Year EPF Interest Rate 2016-17 8.65% 2017-18 8.55% 2018-19 8.65% 2019-20 8.65% 2020-2021 8.55% 2021-2022 8.55% 2022-2023 8.15% EPF Interest Rates 2023-24 The interest rate on EPF is reviewed on a yearly basis. The EPF interest rate for the fiscal year 2023-24 is 8.15%. When the EPFO announces the interest rate for a fiscal year and the year closes, the interest rate is computed for the month-by-month closing balance and then for the entire year. The year in which the new interest rates are published remains valid for the following fiscal year, i.e. from the year beginning on April 1st of one year to the year ending on March 31st of the following year. Here are a few key points to remember about EPF Interest Rate: The interest rate of 8.15% has come into effect and will be applicable to EPF deposits. Even though the interest is calculated monthly, it is only deposited to the Employees’ Provident Fund account once a year on March 31st of the applicable fiscal year. The transferred interest is added to the next month’s balance, i.e. April’s balance, and is then used to calculate interest. If no contributions are made to an EPF account for 36 months in a row, the account becomes dormant or inoperative. Employees who have not reached retirement age might earn interest on their inactive accounts. Interest is not paid on funds put in retired employees’ inactive accounts. The interest collected on dormant accounts is taxed at the member’s slab rate. The employee will not receive any interest for payments made by the company to the Employees’ Pension Scheme. However, beyond the age of 58, a pension is provided out of this amount. EPF Contribution Rate Employee contribution to EPF: 12% of salary. Employer contribution to EPF: 3.67% of salary. Employer contribution to EPS: 8.33% of salary subject to a ceiling of Rs. 15,000 salary, i.e. Rs. 1,250. Details Required to Calculate EPF Interest Rate The current age of an employee. Current EPF balance. Monthly basic and dearness allowance of up to a maximum of Rs.15,000. Percentage of contribution to EPF. Retirement age. Calculation of EPF Interest The employee’s contribution is 12% of basic salary + dearness allowance, while the employer’s 12% contribution is divided into two parts – 8.33% towards EPS account upto a maximum of Rs 1,250 per month and balance amount is transferred to the EPF account.  For example, if an employee’s basic salary + dearness allowance is Rs. 50,000:  Employee contribution to EPF (12% of Rs. 50,000): Rs. 6,000. Employer contribution to EPS (8.33% of Rs. 15,000): Rs. 1,250. Employer contribution to EPF (6,000 – 1,250): Rs. 4,750. The total EPF contribution for a month will be ( Rs. 6,000 + Rs. 4750): Rs. 10,750. Total EPF contribution in the above case for the first month of joining the service = Rs. 10,750. Interest Rate: 8.25% / 12 months = 0.688% Interest on the EPF contribution for the 1st month = Nil EPF account balance at the end of 1st month = Rs. 10,750 EPF contribution in the 2nd month = Rs. 10,750Total amount accumulated in the 2nd month of service=Rs. 21,500 Interest accrued on the EPF contribution in the 2nd month = Rs. 21,500 * 0.688%= Rs.147.92 Total EPF contribution balance at the end of 2nd month = Rs. 21,500 EPF contribution in 3rd month= Rs. 10,750 Total amount accumulated in 3rd month= Rs. 32,250  Interest on the EPF contribution as on 2nd month= Rs. 32,250 * 0.688% = Rs.221.88Total EPF contribution balance at the end of 3rd month= Rs. 32,250  FAQs What are the Withdrawal permissions from EPF amount including epf interest under the rule? In normal circumstances, an employee is able to withdraw the principal amount including the accrued interest upon retirement. However, anyone over 54 years of age is permitted to withdraw 90% of the accumulated balance. If an individual is out of employment for 60 days or more, the employee is entitled to withdraw the entire accumulated balance on that date. Can you avail advances against your EPF balance? The contribution to the scheme is meant to take care of the post-retirement needs however one does not have to wait until retirement to avail financial assistance

The Central Sales Tax Act, 1956 defines the guidelines which determine if a trade can be categorised as a sale or purchase of goods by way of inter-state commerce in order to outline the conditions and restrictions regarding the tax that is imposed. Introduction: The structure and sections of the Indian tax system is fairly comprehensive, with simple and coherent variation in power between local, state and central governments. The taxes on earnings, service tax, central excise, and customs obligations are imposed by the central government. Income cited does not comprise of profits made from agriculture. The sixth alteration in the Constitution of India totally revolutionized the picture of taxation in the country by declaring the Central Sales Tax (which is now referred to as CST). The revision brought about the duties on procurement or trade of merchandises and services between states particularly within the authority of the constitutional power of the Indian Parliament. The limits shall be put on the hegemonies of state legislatures affecting to the tax impositions on purchasing or selling of goods within the state where they are of distinct consequence in the state-to-state trade or exchange. According to the Article 266 of the Indian Constitution, it is plainly detailed that government cannot impose tax on a person until or unless it is lawfully authorized. So while completing this step, the Central and Sales Tax of 1956 was approved, which directs and leads the current Central Sales Tax System. Central Sales Tax is imposed by the Central Government of India as specified in the Entry 92-A of List I (Union List) of the Seventh Schedule to the Indian Constitution. But it can be only collected by that particular state government from where the products were vended. So any proceeds thus gathered is to be submitted to the same State Government that levies the tax. The current Central Sales Tax rate in our nation is only three percent. Central Sales Tax is levied only on those dealings between two or more states and is not applicable for those happened within the state. Section 3 (a)/ (b) of the Sales Tax Act explicitly states this. And if any such deal between people from two different states document the shifting of merchandise, then it is known as interstate transaction. A sale, made by transference of title deeds to products, when they are in any kind of inter-state trade or movement. Categorization of Goods and Services Central Sales Tax Act has also given added significance to specific products and services so as to surge their spread. Section 2-(d) of the Sales Tax Act categorizes these merchandise into two: Declared Goods: Declared goods are those merchandises/ imports that have been given singular prominence thanks to Section 14. Cereals, sugar, cotton, pulses, crude oil, oilseeds and jute are a few examples for the same. Other Goods: The rates of tax on these goods are much lesser as compared to the declared ones. Central Sales Tax Transaction Forms Manufacturers, dealers, brokers, exporters and industrialists, during the course of business deal, have to provide certain statements in the agreed format to the wholesalers and consumers. These forms are printed and delivered by sales tax officials and has to be drafted in three copies. Some essential forms are listed below: Form D: Every sale made to the Government is taxed at the rate of four percent or pertinent sales tax rate for the specific sale within the state, whichever is lesser. To enjoy this discount on CST, Form D is provided by the government department that buys those products. Form I: This form is provided by the businessman or dealer living or operating in a Special Economic Zone (SEZ). This form offers rebate on the Central Sales Tax as there are no taxes imposed when the deal is made to a dealer from SEZ. Documentation for Central Sales Tax ID Proof: Copy of PAN Card, Driving License, Passport, Voter’s ID, Aadhaar Card or any government photo-bearing ID issued by government Residence proof: Copy of any of the above (except PAN Card), Ration Card, Rental/ Lease Agreement, any of your recent utility bill Four to six passport sized photos Address proof of the business establishment First sale or purchase invoice Duplicate copy of LR / GR and proof of payment along with bank statement Guarantee, security and / or reference letter Nevertheless, the documentation procedure varies from state to state because state government has the liberty to frame the rules and guidelines and amend them for their people. Procedure to get Central Sales Tax Registration Are you an industrialist, merchant, exporter or broker? Steps involved in registering for central sales tax (CST) is exactly the same as that of VAT. First thing to do is to get your TIN registration number. Confused? TIN stands for Taxpayer Identification Number and is a unique 11-digit number issued by the Department for Commercial Tax of corresponding states. This has to be specified in every VAT dealing and business correspondence. TIN number is also a way to categorize merchants and brokers registered under VAT. It is a single number and is allocated to the traders to register for each of the three taxes, namely, CST, VAT and Service Tax. The first two digits of TIN denote the state from which it is availed. But the purpose of the remaining nine digits of the TIN number usually vary for each state. It is applicable whether the commercial operations are intrastate or inter-state. Under the Indian Income Tax. FAQs What is CST Registration? CST (Central Sales Tax) Registration is a registration process for businesses that engage in inter-state sales of goods. It allows sellers to collect and pay Central Sales Tax on sales made to buyers in other states. Who needs to obtain CST Registration? Any dealer or business entity that sells goods to buyers in other states is required to obtain CST Registration. This includes manufacturers, wholesalers, retailers, and other traders involved in inter-state transactions.