14 July 2013
Employee has received PF when she left her job and her service was less than 5years. The amount can be divided in four parts 1. her contribution 2. interest on her contribution 3. employers contribution 4. interest on employers contribution.
I think her contribution is exempt but under which section?
Employers contribution and interest on that would be salary and interest on her contribution will be other sources.
Pl. give relevant section rules I found rule 8 part A of forth schedule. But I could not found details of how to charge and under what head.
15 July 2013
I suppose the provident fund is recognised provident fund.
If employee has received the amount provident fund after rendering a service for less than five year, for the purpose of Income Tax the fund will be considered as unrecognised provident fund from the beginning.
In such a case the employers contribution and interest there on will be taxable as Income from Salaries.
Employees contribution is not supposed to be allowed as a deduction ( when it is treated as unrecognised) but having allowed the same in the past now it will be taxable and as well interest there on under the head income from othersources.
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