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PPF Interest (Income Tax)

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This query is : Resolved



( Author )
22 July 2011

are all Interest from provident fund exempt u/s. 10(11)?
if tax has been deducted at source then whether such interest income is exempt u/s 10(11)?
the interest has been received from reliance associates pvt ltd employee provident fund.. tax has been deducted at source then whether such interest income is exempt or not??

thank u in advance


U S Sharma

( Expert )
22 July 2011

PF interest withdrawl before expiery of 5 complete finance years is not eligible for benefit of sec 10(11)

one finance year means 1st april to 31st march of next calandar year.


CA Navin Jain

( Expert )
22 July 2011

Yes, all Interest from provident fund are exempt u/s. 10(11).

As interest on PPF is exempt from tax hence no need to deduct the tds.

but if employee withdraw the amount from ppf account before the 5 years then it will be taxable, therefore reliance has deduct the tds on such amount.


CMA. CS. Sanjay Gupta

( Expert )
22 July 2011

Interest on PPF is fully exempt.

For EPF see below link---

http://taxguru.in/income-tax/tax-treatment-recognized-provident-fund-rpf-unrecognized-provident-fund-urpf-statutory-provident-fund-spf.html


RAMESH KUMAR VERMA

( Expert )
22 July 2011

ca Navin jain sahab, thanks i will reply as you mentioned & hon'ble shri sanjay gupta ji thanks for enlighten on this matter.

thanks all the experts......


UNNATI BHOJAK

( Author )
22 July 2011

thank u all the experts


Ram Avtar Singh

( Expert )
22 July 2011

PF interest exempted from tax for 2010-11


NEW DELHI: Giving relief to 4.71 crore subscribers of EPFO, the government has allowed tax exemption on the 9.5 per cent interest income on PF deposits for 2010-11.

The finance ministry notification last week raised income tax exemption to 9.5 per cent interest income from 8.5 per cent.
The decision clears air for EPFO subscribers who were given the benefit of increased interest rates by one percentage point for 2010-11, but the finance ministry had not matched the interest hike with a commensurate tax exemption.
In the absence of the commensurate income tax exemption, the subscribers were earning higher returns even as it was liable to income tax. EPFO had decided to provide 9.5 per cent interest rate on PF deposits for 2010-11 after which it was endorsed by the finance ministry in March this year.
In 2001, the finance ministry had allowed tax exemption on interest income of up to 12 per cent on PF deposits. This exemption prevailed till August 31, 2010. In August last year, the finance ministry had notified tax exemption of up to 8.5 per cent tax on interest income on PF deposits from September 1, 2010, onwards which now stands superseded.
EPFO had decided to pay 9.5 per cent rate of return for 2010-11 after it found a surplus of Rs. 1,731 crore. But the rate was stagnant at 8.5 per cent for five years since 2005-06.
EPFO had also maintained interest rate of 9.5 percent for three consecutive fiscals from 2002-03. The rate of return was 11 and 11.25 percent in 2000-01 and 2001-02 respectively. The interest income was even higher at 12 per cent 10 years during 1989-90 to 1999-2000.


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