Is Provident Fund (PF) taxable under the new income tax regime?

In summary

Under the new income tax regime, your Provident Fund continues to support retirement savings, but common Section 80C deductions are unavailable. The tax treatment of contributions, interest, and withdrawals depends on prescribed limits and applicable conditions.

• Section 80C deduction is unavailable
• Regular PF contributions can continue
• Eligible PF interest remains tax-exempt
• Excess contribution interest may become taxable
• Eligible withdrawals can remain tax-exempt
• Employer contributions have prescribed tax limits

• Fixed Deposits offer predictable additional returns

  
  

Understanding these rules can help you plan retirement savings alongside fixed-return options such as Bajaj Finance Fixed Deposit.

PF under Old vs. New Tax Regime: Key differences

The tax treatment of EPF (Employees’ Provident Fund) differs mainly in the deduction available on employee contributions.

For EPF accounts where the employer also contributes, interest attributable to employee contributions exceeding Rs. 2.5 lakh annually becomes taxable. Where there is no employer contribution, the corresponding threshold is Rs. 5 lakh.

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 8.15% p.a. returns). 

What exactly is the new tax regime?

The new tax regime provides revised income-tax slabs while restricting many deductions and exemptions available under the old regime. It is the default tax regime, although eligible taxpayers can opt for the old regime according to applicable rules.

For AY 2026-27, the new tax regime follows these slabs:

Common deductions such as Section 80C and Section 80D are generally unavailable under the new regime. HRA exemption is also unavailable, although specified benefits, including the standard deduction for eligible salaried taxpayers, continue to apply.

Benefits of the New Tax Regime

The new regime may simplify tax planning for individuals who do not claim several deductions or exemptions.

• Simpler Tax Structure: Fewer deductions and exemptions need to be considered while calculating taxable income.
• Revised Tax Slabs: Wider income slabs and revised rates apply under the new regime.
• Standard Deduction: Eligible salaried taxpayers can claim a standard deduction of up to Rs. 75,000.

• Reduced Investment-Linked Planning: Taxpayers need not make investments solely to claim deductions such as Section 80C.

  
  

The suitability of the new regime ultimately depends on your income, eligible deductions, exemptions, and overall tax liability.

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.

Also Read: Income Tax Late Payment Interest in India

How to choose between Old and New Tax Regime?

Choosing between the old and new tax regimes depends on your taxable income and the deductions or exemptions available to you.

Consider these questions before making your decision:

• Section 80C Investments: Do you regularly claim deductions for eligible EPF, PPF, or other investments?
• HRA Benefits: Do you qualify for and claim House Rent Allowance exemption?
• Medical Insurance: Do you claim eligible deductions under Section 80D?
• Other Deductions: Do you use other deductions available only under the old regime?

• Final Tax Liability: Which regime results in a lower tax liability after considering all eligible benefits?

  
  

The old regime may provide greater value when you claim substantial eligible deductions and exemptions. The new regime may be suitable when such claims are limited, but the final choice should depend on an actual tax comparison.

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 8.15% p.a.). 

Also Read: How to Withdraw PF Amount Online?

Conclusion

The new tax regime changes how taxpayers use deductions for financial planning, particularly because Section 80C benefits are unavailable. However, regular PF contributions can continue, while applicable PF taxation and withdrawal rules remain subject to prescribed conditions. When comparing the old and new regimes, consider your taxable income, deductions, exemptions, and overall financial goals. PF can support long-term retirement planning, while a Bajaj Finance Fixed Deposit can provide assured returns for other planned financial requirements.

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 8.15% p.a.