03 July 2009
We are deducting provident fund @ 10% on basic pay of our employees and depositing the same with our share @ 10% in nationalised bank by opening separate accounts of employees under the head "PF A/c of ....Employee Name....".
our query is
1. can we give rebate to our employees on their 10% PF share u/s 80C ?
2. What is the procedure to recognise the provident fund accounts maintained by the private organisations?
03 July 2009
First find out whether PF trust is created as per trust act and has been informed to Income tax.
If that is not there and you are depositing on your own in a bank account then pf deduction under section 80c is not allowed and also the employer contribution also will be treated as income in the hands of the employee.
03 July 2009
It seems that your organisation is not registered with Regional Providend Fund Commissioner. Please check-up the applicability of the same. It is applicable for the organisations employing 20 or more persons and the contribution rate is 12% of Basic Salary.
However, presuming your organisation is not covered under PF Act and for the well-fare measure you are depositing PF in the respective employees account in Nationalised Bank.
You have to first add employers contribution @ 10% in the salary and allow deduction of the total contribution i.e. 20% while calculating deduction u/s 80C subject to conditions laid under the said section
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