The Finance Ministry has released Rs 9,871 crore as a grant to 17 states.

The Finance Ministry has released Rs 9,871 crore as a grant to 17 states.

The Finance Ministry announced on Tuesday that it had released the fifth monthly instalment of the revenue deficit assistance to 17 states, totalling Rs 9,871 crore. Article 275 of the Constitution provides the states with the Post Devolution Revenue Deficit Grant.

The grants are distributed in monthly instalments in accordance with the 15th Finance Commission’s recommendations to close the revenue gap in the governments’ accounts following devolution. The commission has recommended that the 17 states get this award in the years 2021-22.

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On August 9, 2021, the Department of Expenditure released the fifth monthly instalment of the Post Devolution Revenue Deficit (PDRD) grant to the states, totalling Rs 9,871 crore, according to a statement from the ministry.

In the current financial year, a total of Rs 49,355 crore has been distributed to eligible states.

Andhra Pradesh, Assam, Haryana, Himachal Pradesh, Karnataka, Kerala, Manipur, Meghalaya, Mizoram, Nagaland, Punjab, Rajasthan, Sikkim, Tamil Nadu, Tripura, Uttarakhand, and West Bengal are among the states nominated for the PDRD Grant by the Fifteenth Finance Commission.

E-way Bill blocking for non-payers will resume from August 15

In the financial year 2021-22, the Fifteenth Finance Commission has suggested a total PDRD Grant of Rs 1,18,452 crore for the 17 states. So far, Rs 49,355 crore (41.67 per cent) has been released from this total.

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Are your contribution to EPF, NPS taxable?

 Any amount exceeding Rs. 7.50 lakh contributed by the employer to approved provident fund accounts taken together shall be considered as perquisite in the hands of the employee.

An employer’s contribution to the provident fund account of his employee used to be totally tax-free in the employee’s hands without any monetary cap as long as it did not surpass 12 percent of the minimum wage and dearness allowance.

Whether contribution to VPF is also taken into account for arriving at ?7.5 lakh per year figure?

However, the Finance Act, 2020 introduced an absolute limit of 7.50 lakh on the aggregate of contributions made by an employee to recognized provident fund, NPS (National Pension System) scheme, and an authorized superannuation fund taken together in one year.

employee provident fund

Any amount exceeding Rs. 7.50 lakh paid by the employer to these accounts taken together shall be considered as perquisite in the employee’s hands and shall be included in his salary and taxed at the slab rates. The interest or income earned in spite of such an excess contribution to all three accounts is often included in the employee’s perquisite value year after year.

Contribution to VPF(Voluntary Provident Fund) is considered as amount contributed by Employee to his own provident fund account and not Employer. Therefore the authorized limit shall not be considered when reaching the above limit of Rs. 7.50 lakh.

Epf

The question of adding the interest earned in respect of the contribution made by the previous employer in the above-mentioned limit of 7.50 lakh does not occur as this can not be regarded as an employer’s contribution.

Interest paid in respect of the contribution made by the former employer as well as the new employer is absolutely tax-free in your hands as long as you are working in one company or another. These will become taxable after your retirement to the extent not withdrawn by you.

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