Un recognised provident fund

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This discussion clarifies the tax treatment of unrecognised provident funds (UPFs). While employee contributions to a UPF are not eligible for tax deduction, the interest earned on these contributions is generally not taxable annually while the employee is still in service. Upon retirement, the total accumulated amount, including both contributions and interest, is typically not subject to income tax.

Sanjay Puri

Sanjay Puri (Querist)

21 October 2020 Is the interest earned annualy on employee's contribution under unrecognised provident fund exempted from income tax while in service?
please clarify?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

21 October 2020 Such interest not exempt from income tax.

Sanjay Puri

Sanjay Puri (Querist)

21 October 2020 sir,i have read in ICAI notes that employee's contribution under such fund is not eligible for deduction but interest credited is not taxable yearly. In our case it is CPF(contributory provident fund-unrecognised PF managed in a bank by the organisation)
kindly clarify.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

21 October 2020 Yes, agree with you interest on employees contribution is not taxable.

Sanjay Puri

Sanjay Puri (Querist)

23 October 2020 Thanks a lot Sir.Can you please clarify what is the tax liability when a person gets his contribution and interest earned at the time of retirement from such an unrecognised provident fund.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

23 October 2020 No tax payable.......

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