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It is set up by Company itselfi.e. Company opens a private fund and deposit both employee andempoyersshare.

However, this fundisnot recognizedby Commissioner of Income tax

 

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Employer’s contribution

It is not taxable in the year Contribution is made,

It istaxable in the year amount is received by the employee from fund

 

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Employee’s contribution

:-No deduction available under 80 C as it is not a recognized fund

 

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INTEREST ONURPF

Interest on PF is taxable in the year of receipt as Income from Other Sources

This interest has 2 Components

Interest on PF on Employee’s Contribution

It is taxable as Income from Other Sources

Intereston PF onEmployer’s Contribution

 Taxes as profit in lieu of salary  (income from salaries)

 

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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 6 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com.
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