LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

How is EPF+PPF contribution that exceeds 1,50,000 taxed?

gunturboy26 (Self Employed) (217 Points)

27 February 2017

If a person contributes more than 1,50,000 to his EPF and PPF, how is it taxed while he is filing his taxes? For example if he is in 20% tax slab and the total he contributed is 1,70,000. Is this exceeded 20,000 amount taxed at 20% and he has to pay 4,000?

Thank you.

Reply
Follow
Share

8 Replies

Deepanshu Bansal (Article Assistant) (149 Points)
Replied 28 February 2017

You can invest any amount in PPF and EPF. The amount invested is not taxable and you can claim deduction under section 80C in aggregate for them upto Rs.1,50,000/-.On maturity PPF amount with interest is tax free and same rules applies to EPF amount.

So get back to your case, The person who have invested Rs.1,70,000/- to PPF and EPF is not require to pay any tax on them.

For any Query contact me on bansal.deepanshu1000 @ gmail.com

1 Like

gunturboy26 (Self Employed) (217 Points)
Replied 28 February 2017

Originally posted by : Deepanshu Bansal
	You can invest any amount in PPF and EPF. The amount invested is not taxable and you can claim deduction under section 80C in aggregate for them upto Rs.1,50,000/-.On maturity PPF amount with interest is tax free and same rules applies to EPF amount. So get back to your case, The person who have invested Rs.1,70,000/- to PPF and EPF is not require to pay any tax on them. For any Query contact me on bansal.deepanshu1000 @ gmail.com

Thanks for the reply.

As the limit for 80C is for 1,50,000, what will happen to the exceeded 20,000? Is it taxed as per his tax slab? How is it calculated?

Deepanshu Bansal (Article Assistant) (149 Points)
Replied 28 February 2017

Sir Rs.20,000/- is not taxable as they have invested it. We need to pay Income tax on Income only , Rs.20,000/- is the invested amount so no tax will be applied on it.

1 Like

gunturboy26 (Self Employed) (217 Points)
Replied 28 February 2017

Originally posted by : Deepanshu Bansal
	Sir Rs.20,000/- is not taxable as they have invested it. We need to pay Income tax on Income only , Rs.20,000/- is the invested amount so no tax will be applied on it.

Thanks for the information. But as the limit is only for 1,50,000 something should happen, they have to take some action. Like this we can invest any amount in EPF or PPF.

Deepanshu Bansal (Article Assistant) (149 Points)
Replied 28 February 2017

Limit are already for PPF and EPF

1. One can invest upto Rs.1,50,000/- in PPF in Each Financial year and Greater than Rs. 1,50,000/- is not allowed in PPF

2. Emploee and employer both contribution in aggregate can be Rs.15,000/- per month and in a year it can be Rs.1,80,000/-

1 Like

gunturboy26 (Self Employed) (217 Points)
Replied 28 February 2017

Originally posted by : Deepanshu Bansal
	Limit are already for PPF and EPF 1. One can invest upto Rs.1,50,000/- in PPF in Each Financial year and Greater than Rs. 1,50,000/- is not allowed in PPF 2. Emploee and employer both contribution in aggregate can be Rs.15,000/- per month and in a year it can be Rs.1,80,000/-

Thank you for the information.

So what happens to the EPF if i already contributed 1,50,000 to PPF. Will the EPF be taxed later as PPF is Exempt Exempt Exempt category. As 80C is only for 1,50,000 exemption, something should happen to the exceeded amount, either it should be taxed or it should be refunded. What rule or law applies here?

gunturboy26 (Self Employed) (217 Points)
Replied 28 February 2017

I got the answer to my question.

So, yes you can contribute more than 1,50,000 towards EPF and PPF but you can claim 80C deduction only for 1,50,000 and the exceeded amount cannot be used for claiming for any additional deductions.

Thank you for all the replies Deepanshu.

I got the answer. It is clear now.