Defination of salary while taxability of empr's cont. to pf

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Dear Sir,

Employer's contribution to Recognised Provident Fund is Exempt upto 12% of Salary. Thus Contribution made by employer exceeding 12% shall be added to employee’s salary Income.

For the purpose of PF salary is Basic + DA.

If the employer make contribution to Recognised Provident fund @ 12% not on Basic + DA but on the employees' Gross Salary. 

So, whether employer's contribution to Recognised Provident Fund on other than Basic + DA is Taxable or not taxable to employee as rate of contribution is 12%. 

Thanks & Regards,

Ashok Kumar Modi

 

 

 

 

Replies (1)

I think it is taxable.  Also the definition of salary is already given for this purpose:

Salary for this purpose will include the following :

  • Basic salary,
  • Dearness allowance, if the terms of service so provide,
  • Commission based on fixed percentage of turnover achieved by the employee.

https://finotax.com/income-tax/info/retirement-benefit#i6

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