It is for Private employees

+

Fund is recognized by Commissioner of Income tax

 

Employer’s contribution

It is exempt up to 12% of salary .

 

Here ,Salary means

Basic + DA + Commission as percentage of turnover .

Note :–

If 13% contributed then 12% is exempt and balance 1% is  taxable .

 

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Interest on provident fund – it is exempt up to 9.5% p.a.

(If 10% received,10%-9.5% i.e 0.5% taxable)

 

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Employee’s contribution − it is treated saving under Section 80 C

 

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Withdrawal of P.F.

  • If withdrawal after 5 year of service, then exempt
  • If withdrawal before 5 year due to employees iIl-health or business being discontinued or any other reason beyond the control of employee then also exempt .
  • If there is change in job and PF amount is transferred to new employer's PF account, then also exempt .
  • If withdrawal due to any other reason (e.g., employee resigns from job and withdraws PF), then
    • Employer Contribution is taxable as profit in lieu of salary.
    • Employee Contribution: He would have earlier claimed 80C deduction. Now that deduction will not be available and tax will be recalculated for previous period
    • Even Interest on RPF is taxable under Income from Other Sources

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  1. Income Tax
  2. Income from Salaries
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Davneet Singh
Davneet Singh is a graduate from Indian Institute of Technology, Kanpur. He has been teaching from the past 7 years. He provides courses for Mathematics and Science from Class 6 to 12. You can learn personally from here https://www.teachoo.com/premium/maths-and-science-classes/.
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