There is a deposit limit on Public Provident Fund or PPF according to which an individual depositing under more than ₹1.5 lakh annually cannot apply for an income tax rebate under section 80C of the Income Tax Act and will face many other restrictions. And with a recent update from the Government, a similar cape is also imposed on GPF or General Provident Fund, which is only for government employees in India.
Subscription Cap Limit On GPF
So, now the annual subscription amount of GPG is capped, and there will likely be other restrictions also which will come to light later. GPF or General Provident Fund is specially designed and used by Government employees who are getting benefits under the old pension scheme to grow their retirement fund.
So what is the capped limit? The Government employees will now have to limit their GPF subscription amount to ₹5 lakh in a financial year, to avoid taxes and other complications starting from FY 2022-2023.
“According to an Office Memorandum (OM) No. 3/6/2021-P&PW(F) dated 11/10/2022 by the Department of Pension & Pensioners’ Welfare (DOPPW), the sum of monthly GPF subscriptions for FY 2022-23 cannot exceed Rs 5 lakh. So, if the total subscription of a government employee has exceeded Rs 5 lakh till October 2022, deductions of GPF subscriptions from the salary will be stopped,” read the official memo from the Government.
“The monthly subscriptions for the next financial year (FY 2023-24) should be regulated as per Rule 8(i) sub-clause (b) in such a manner that the sum of the subscription shouldn’t exceed the limit of Rs 5 lakh,” it further reads.
On the other hand, it is still not clear how the extra subscribed amount till October 2022, if it had exceeded ₹5 Lakh, will be adjusted by the Government. There is also a possibility that the exceeded amount will be adjusted with the subscription of FY 2023-2024.
“However, it is not clear whether the extra subscription, if any, exceeding Rs 5 lakh made till October 2022, will be refunded or adjusted with the subscriptions of the FY 2023-24.”
“So far, that is before the new OM became effective, the minimum amount of subscription to the GPF was 6 per cent of the emoluments and the maximum was equal to the emoluments received by an employee, without any cap on yearly subscriptions”, mentioned financial express.