EPFO Applauds New Income Tax Harmonisation in Union Budget

The Employees' Provident Fund Organisation (EPFO) has lauded the recent proposal in the Union Budget 2026-2027 to rationalise the Income Tax regime for provident fund trusts. This move aligns the income tax framework with the statutory and administrative provisions governing EPFs, as stated by the labour ministry.

The Budget addresses existing discrepancies between eligibility for exemptions under income tax provisions and the Employees' Provident Funds and Miscellaneous Provisions Act, 1952. Current differences in investment norms and employer contribution limits have resulted in confusion and litigation, which the new proposal aims to eliminate.

This harmonisation will align investment norms and set a monetary ceiling for employer contributions at Rs 7.5 lakh per annum. Such steps are expected to greatly benefit stakeholders by ensuring convergence and reducing unnecessary legal challenges in managing provident funds.