The government has put yet another ceiling on tax-free contribution made to provident funds. Replying to the debate on Budget 2021-22, Finance Minister Nirmala Sitharaman said that a ceiling of Rs 5 lakh per annum would be applied in those cases where there is no contribution towards provident fund (PF) by the employer.

Presenting the Budget 2021-22, Finance Minister Nirmala Sitharaman had earlier proposed to restrict tax exemption for the interest income earned on the employees' contribution to various provident funds to the annual contribution of Rs 2.5 lakh. This restriction was made applicable for the contribution made on or after April 1, 2021. The changes were done to rationalise tax exemption for the income earned by high income employees.