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A query in income tax

kesha (...) (218 Points)

02 June 2013

Hello Everyone.

Can some please tell me the tax consequencies of following:

1.Employee's Contribution to PF

2. Interest on Employee's Contribution to PF

3.Employer's Contribution to PF

4.Interest on Employer's Contribution to PF

Thanks alot in advance ..:-)-)-)-)

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CA Aman Gupta (Chartered Accountant) (344 Points)
Replied 03 June 2013

The table below shows the tax treatment of different kinds of provident funds:

Fund	During Continuity of Job			Upon Retirement
	Employee’s Contribution	Employer’s Contribution	Interest on Provident Fund	Repayment of sum on retirement, resignation or termination
RPF	Deduction under Section 80C is available.	Exempt upto 12% of Salary. Thus Contribution made by employer exceeding 12% shall be added to employee’s salary Income.	Exempt upto 9.5%. Interest exceeding 9.5% shall be added to employee’s Salary Income.	Nothing is taxable subject to following conditions: Employee left the job after five years of service OR Where Period of service less than 5 years, the termination is due to ill health, discontinuance of business of employer. OR here on re-employment, the balance in R.P.F is transferred to R.P.F with new employer. [For the purpose of computing 5 years period, Period of services rendered with previous employer shall also be included.] If none of the above conditions are satisfied then: The amount not taxed earlier shall be taxed in the same manner as URPF, given below. Any tax concession (e.g. 80C) availed by assesses for contribution to RPF shall now be withdrawn.
URPF	No deduction under section 80C available	Any amount of contribution is not taxable	Not taxable	Sum received on retirement/ termination comprise of following: Employer’s Contribution and interest there on: Taxable as Salary Income. Employee’s own Contribution : It is not taxable. Interest on employee’s contribution: Taxable as income from other sources.
SPF	Deduction under Section 80C is available.	Fully Exempt	Fully Exempt	Fully Exempt
PPF	Assessee / Employee can make contribution to PPF, No concept of Employer’s Contribution. Deduction under section 80C available on contribution made.			Amount received (including interest) is Fully Exempt.