Employer's contribution of PF received after retirement and with litigation

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An employee retired and received their PF amount, but later received salary arrears due to a court settlement. The employer also directly paid the PF contribution on these arrears. The query is whether this direct PF payment is considered exempt income or taxable as part of the salary arrears.

rmalhotra

rmalhotra (Querist)

29 June 2022 Sir,
If employee retires , and also received PF amount from PF office. But during service some litigation was pending in court in a case filed by employee against employer during service period and which was subsequently settled in favor of employee after his retirement. As a result employee received arrears of salary in terms of court's decision and which is taxable as salary.

In addition employer also paid Employee the share of PF contribution on salary arrears directly to employee, as PF a/c had already closed at his retirement without any interest component.

Now query arises whether this payment of Employer's share of PF contribution , received by employee directly from employer thru bank transfer, Can it be treated as exempted income OR it will be treated as part of salary arrears and will be taxed.