Income Tax on PF Contribution

[former_member223824]

Hi Experts,

I have a query that if the employee & empolyer contribution is more than the statutory limit of 12%,

For Ex.p an employer Paying 15% PF Contribution & deducting the same as Employee Contribution.Employee is also contributing 15 % as VPF.

So are these contribution Taxable or Non Taxable .

Any inputs on this matter.

[former_member223824]

Closed.

[former_member223824]

Hi Ankit,

Thanks for the detailed information,it is usefull.

Do you mean to say that Employee contibution 15% , 3% more on 12% will be taxed .

& if the employee contributes to VPF at the rate of 12 % that is also going to be taxed.

The contribution employer makes, employer contri will be exempted the full amount.

Can you share some info on the same or any link where i can get full details .

[ankitvasavada]

you can read the PF act for the same. it will help you in full details.

or search for Section 80C details and chapter VI details.

regards

Ankit v

[former_member223824]

Hi Gurus,

is the Employee & Employer contribution inexcess of 12% Taxable as per income tax act ???

[Former Member]

IT will be non taxable under chapter VIA till it is within limit of 100000 i.e. section 80C limit.

[former_member223824]

Hi Praveen,

I could only manage to gather this much of information

Provident Fund & Voluntary Provident Fund

Provident Fund is deducted directly from your salary by your employer. The deducted amount goes into a retirement account along with your employer's contribution. While employer's contribution is exempt from tax, your contribution (i.e., employee's contribution) is counted towards section 80C investments. You can also contribute additional amount through voluntary contributions (VPF). The current rate of interest is 8.5% per annum and interest earned is tax-free.

Can you please provide some more details of the limit 100000 as per 80C or any link for the same.

[Former Member]

I think that info is complete.... let me know if you have any specific query.....

Employee can contribute as much as he want subjected to limit of 100000 and his net income.

[former_member223824]

Hi Praveen,

You mean to say that in an year the employee can contribute upto 100000 or his total PF amount in the trust should not exceed 100000, beyond 100000 will it be taxable.

What about the employer contribution if more than the statutory rate & VPF as well.

Please provide some information if possible.

[Former Member]

Employee PF amount will be Tax Exempted in Income Tax not ER PF amount

Best Regards,

[former_member223824]

Hi rk,

does it mean that if the employee contri goes beyond 100000,still it will not be Taxed & employer what ever contribution is there is fully taxed.

[Sujith_EM]

The exemption is only for employee contribution and it has a limit of 100000, beyond this it is taxable.

The 100000 limit (for section 80 ) included not only Employee PF, it also consists of items like Medical insurance premium,,Deduction for dependent with disability etc

The employer contribution is not a part of employee tax calculation.

[ankitvasavada]

Hi

Let me tell you the complete thing.

PF has two Part one is employee contributuion and employer contribution. perheps employee is contributing from there own salary so that only amount attract the Incom tax thing. employer contribution does not attracts the Taxation part of employee side.

PF standard comtribution rate is 12% of basic salary. the same amount will be contributed by your employer in your PF account and pension account. (Employers contribution have two parts one is PF and other is pension)

when en employee contributes to PF means 12% of his basic salary then he is eligible for exemtion for the same amount.

now empliyee can contribute more then 12% in the head of VPF. which could be 88% of his basic salary. that completes there 100% salary. and for the full amount is elegible for exemtion according to section 80C of Income tax.

section 80C says how much you invest in all the head in the section, you get exemption only till 100000/-. if you invest more then there is of attaction of incometax. and it is not exemted.

PF amount is taxable if you withdraw the amount before 5 years.

I hope this is clear.

regards

Ankit V