Accounting Treatment of EPF

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This discussion clarifies the accounting treatment for Employee Provident Fund (EPF) for a salaried individual with a business. It confirms that the entire accumulated EPF balance, including both employee and employer contributions, can be shown as a long-term investment on the balance sheet. Furthermore, it's valid to create a liability for the employee's March contribution and to report accrued EPF interest as exempt income.

Accounts & Tax Consultant

Accounts & Tax Consultant (Querist)

02 July 2023 Respected Experts,

One of my friend is a Salaried Person and also running a Travels Business.

Im Preparing Balance Sheet to him.

My Question is;

1. Can we show his EPF Accumulated Balance in Balance Sheet as Long term Investment.

2. If Yes, do we need to show the Investment only for his Portion? ( Employee Share) or the Entire Accumulated balance ( Employee Contribution + Employer Contribution)

2. Also can we also create Liability of EPF payable for March ( only Employee Contribution)

3. If the above Treatment is valid, then can i also show Interest Accrued from EPF in Exempt Income

Kindly advise