One of my Friend is got Receipt from Provident fund
His TDS is Deducted @ 10%
My Querry is Under which head that income should be shown?
Plz help
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(160332 Points)
Replied 15 November 2017
Lump sum payment received from unrecognized provident fund at the time of retirement/termination shall be taxable as follows-
a. Payment received in respect of employer’s contribution and interest thereon is taxable under the head “Salaries”
b. Payment received in respect of interest on employee’s contribution is taxable under the head ”Income from other sources”.
c. Payment received in respect of employee’s contribution is not chargeable to tax.
N.B. Lump sum payment from Recognised provident fund is exempted from tax in some cases. When not exempt provident fund will be treated as an unrecognised fund from the beginning
Dhirajlal Rambhia
(SEO Sai Gr. Hosp.)
(160332 Points)
Replied 18 November 2017
Payment from Recognised Fund [Section 10(12)]
The accumulated balance due and becoming payable to an employee participating in a recognised provident fund, is exempt to the extent provided in rule 8 of part A of the Fourth Schedule.
|
Recognised Provident Fund |
|
|
Employer’s Contribution |
Employer’s contribution to such fund, up to 12% of salary is not treated as income of the employee (see Note 1). |
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Interest |
Interest credited to such fund up to 9.5% per annum is exempt in the hands of the employee, interest in excess of 9.5% is charged to tax in the hands of the employee. |
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Amount received at the time of termination |
If certain conditions are satisfied, then lump sum amount received from such fund, at the time of termination of service, is exempt in the hands of employees. |
Notes:
Accumulated balance paid from a recognised provident fund will be exempt from tax in following cases:
(a) If the employee has rendered a continuous service of 5 years or more. If the accumulated balance includes amount transferred from other recognised provident fund maintained by previous employer, then the period for which the employee rendered service to such previous employer shall also be included in computing the aforesaid period of 5 years.
(b) If the service of employee is terminated before the period of 5 years, due to his ill health or discontinuation of business of the employer or other reason beyond his control.
(c) If on retirement, the employee takes employment with any other employer and the balance due and payable to him is transferred to his individual account in any recognised fund maintained by such other employer, then the amount so transferred will not be charged to tax.
Except above situations, payment from a recognised provident fund will be charged to tax considering such fund as un-recognised from the beginning
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