Is Your Provident Fund Still Tax-Free? Know What Changes Under the New Tax Regime

With the introduction of the new income tax regime, several exemptions and deductions have been removed—including the popular Section 80C benefits. One of the most affected areas? Your Provident Fund (PF). Whether you are a salaried professional or a seasoned taxpayer, it is crucial to understand how your PF contributions and returns are now treated under the revised rules.

Let’s decode what’s changed, what’s still exempt, and how you can balance your investments better with fixed-return instruments like Fixed Deposits (FDs).

Here’s how PF taxation has evolved between the two systems:

• Old Tax Regime: Contributions to EPF (Employees’ Provident Fund) were eligible for deductions under Section 80C—up to Rs. 1.5 lakh annually.
• New Tax Regime: These deductions are no longer available. You still contribute, but don’t get any tax relief on it.
• Employer Contributions: Taxable if the combined yearly employer contribution to EPF, NPS, and Superannuation exceeds Rs. 7.5 lakh—applies under both regimes.
• EPF Interest: If your own PF contribution exceeds Rs. 2.5 lakh in a financial year, the interest earned on the excess amount becomes taxable. This rule started from FY 2021–22.

While PF offers long-term stability, pairing it with a Fixed Deposit ensures short- to medium-term liquidity with guaranteed returns. Explore Fixed Deposit options by Bajaj Finance (get up to 7.30% p.a. returns). 

Introduced in Budget 2020, the new tax regime simplifies tax slabs and offers lower rates—but comes at a cost: no common deductions or exemptions like 80C, 80D, HRA, etc.

It's ideal for:

• Individuals with limited investments
• Salaried professionals who prefer simpler tax filing
• Those who prioritise take-home salary over long-term deductions

• Lower tax rates across income brackets
• Minimal paperwork—no proof of investment needed
• More cash in hand, especially for those not leveraging deductions
• Streamlined filing process, which appeals to digital-first taxpayers

Did you know? 

If you skip 80C deductions, you could lose out on traditional compounding tools. A Bajaj Finance Fixed Deposit can help plug this gap with assured returns and flexible tenures. Start an FD in Minutes with as low are Rs. 15,000.

Here’s the clear answer—No.

If you opt for the new regime:

• You cannot claim 80C deductions, even for long-trusted tools like EPF, PPF, or ELSS.
• The goal is to simplify taxation—not reward investments.
• Voluntary contributions to your PF won’t reduce your taxable income.
• You must evaluate both regimes—use a tax calculator or consult a financial advisor to understand which gives better results.

Balance Safety and Growth:
While PF secures your retirement, an FD can serve short-term goals like a vacation, gadget upgrade, or even emergency funds. Book a high-interest FD today. 

It’s not about one being better than the other—it’s about what suits your lifestyle and financial goals. Ask yourself:

• Do I invest regularly under 80C?
• Do I pay rent and claim HRA?
• Am I covered under medical or life insurance?

If you answered yes to most, the old regime might still work better. If not, the new regime could put more money in your hand every month.

Secure Today, Prepare for Tomorrow! 
Pairing your EPF with a Bajaj Finance Fixed Deposit can help you build a more predictable and tax-efficient portfolio. Check FD Interest Rates (up to 7.30% p.a.). 

Also Read: How to Withdraw PF Amount Online?

The new tax regime does away with traditional exemptions like Section 80C, changing the way your Provident Fund is taxed. While it offers lower tax rates and simpler compliance, it may not be ideal for investors who rely on deductions to reduce taxable income.

As you compare the regimes, remember: your tax plan doesn’t have to rely on just one tool. Use a mix of long-term instruments like PF and short-term products like FDs to strike the perfect balance between safety and returns.

Boost Your Retirement Corpus—One FD at a Time
Combine your PF with a fixed deposit to lock in predictable, high-interest income. Open your FD now and get up to 7.30% p.a. 

Calculate your expected investment returns with the help of our investment calculators