Addition of PF (Both the contribution) to arive total income

Tax queries 5041 views 10 replies

In calculation of total / gross income, whether we have to add employer contribution of PF.   Again whether we can deduct the employer contribution also under deduction (Within the ONE LAKH limit)  or not?   

Replies (10)

you can deduct it under 80 C limit.

Yes. The amt will be added while calculating your Salary income and therefore your Gross total income but you will also get deduction under Sec 80C upto Rs.1Lakh

Employer contribution towards PF will not part of employee salary. Only employee contribution will be included in Gross salary and the same can be shown as deductions u/s 80C .

The employee contribution is already added in Total Salary so no need to add it again.

Hi Everyone,

Regarding Employee contribution: The same will not be included in salary as it is already included. It will be allowed as deduction under section 80C (upto Rs. 100,000)

Regarding Employers' contribution: When the contribution is made towards recognised Provident Fund, taxable amount is such contribution which exceeds 12% of salary of the employee. Salary = Basic + Da (forming part of retirement benefits) + commission based on fixed percentage of turnover.

Similarly, that part of interest on employers' contribution is taxable which exceeds 8.5% p.a. w.e.f 1.9.2010. Before it was 9.5% p.a. 

 

Hope this helps.

Regards,

Rahul Agarwal

As per section 17 of IT act under  perks you can find that it includes:

(v)  any sum payable by the employer, whether directly or through a fund, other than a recognised provident fund or an approved superannuation fund 87[or a Deposit-linked Insurance Fund established under section 3G of the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948 (46 of 1948), or, as the case may be, section 6C of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952)], to effect an assurance on the life of the assessee or to effect a contract for an annuity;

 

So, any contribution other than recognized /approved PF fund will be taxable and any contribution  in excess of 12%.

As "employer contribution" is not taxable  so deduction of 80C doesnot comes into picture.

Particulars

Statutory Provident Fund

Recognized

Provident Fund

Unrecognized

Provident Fund

Public

Provident Fund

Employer Contribution

Exempt

Taxable Above12% of Salary

Exempt

    N.A

Interest Credited to Provident Fund

Exempt

Taxable above9.5%

Exempt

Exempt

Employee contribution (Deduction U/s80c)

Available

Available

Not  Available

Available

Maturity

Benefit

Exempt

Exempt subject to condition

Note

Exempt

Hi everyone,

Is there any limit for deduction regarding employer's contribution towards PF in the books of employer.

Wow......!

 


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