Hi Everyone,
Our company provides facility of Provident Fund to employees. For those whom it is applicable, company provides contributory PF. But for those whom it is not applicable, company provides EPF deduction with the entire deduction being borne by the employee.
Now my question is, does the employee get the full amount deducted from him/her salary as exempt from Income Tax. Or do we need to break it up and he gets tax exemption only for the 12% that is actually supposed to be the employee's contribution to EPF?
Kindly provide me an answer to this query at the earliest.
Regards,
Gaurang S
From India, Mumbai
30Our company provides facility of Provident Fund to employees. For those whom it is applicable, company provides contributory PF. But for those whom it is not applicable, company provides EPF deduction with the entire deduction being borne by the employee.
Now my question is, does the employee get the full amount deducted from him/her salary as exempt from Income Tax. Or do we need to break it up and he gets tax exemption only for the 12% that is actually supposed to be the employee's contribution to EPF?
Kindly provide me an answer to this query at the earliest.
Regards,
Gaurang S
From India, Mumbai
Hi,
Because here, the employee is not under the limit of mandatory PF deductions, so the employee is voluntarily contributiong towards PF @ 12%, thus he'll getting benefits for the same only....
warm regards,
Umesh Chaudhary
(welcomeumesh@yahoo.com)
From India, Delhi
Because here, the employee is not under the limit of mandatory PF deductions, so the employee is voluntarily contributiong towards PF @ 12%, thus he'll getting benefits for the same only....
warm regards,
Umesh Chaudhary
(welcomeumesh@yahoo.com)
From India, Delhi
Hi Umesh,
Thank you for your reply. If the employee gets benefit for only 12%, what about the other 12% that has been deposited in his PF account? If the employee does not get tax benefit on this 12%, why should he/she have this amount deducted except for considering it as savings?
Can you please give me an idea about that?
Regards,
Gaurang S
From India, Mumbai
Thank you for your reply. If the employee gets benefit for only 12%, what about the other 12% that has been deposited in his PF account? If the employee does not get tax benefit on this 12%, why should he/she have this amount deducted except for considering it as savings?
Can you please give me an idea about that?
Regards,
Gaurang S
From India, Mumbai
Hi,
That 12% part is exempted too in IT but who is contributing 12%, it's his employer, thus employer'll be taking benefit of this..whenever we file a income tax return..we show our income then deduct our savings in the form of PF etc. etc..but we only deduct our share..because we saved it at our end and about the employer's contribution, the employer will be getting the benefit.
I hope it's clear.
warm regards,
Umesh Chaudhary
)
From India, Delhi
That 12% part is exempted too in IT but who is contributing 12%, it's his employer, thus employer'll be taking benefit of this..whenever we file a income tax return..we show our income then deduct our savings in the form of PF etc. etc..but we only deduct our share..because we saved it at our end and about the employer's contribution, the employer will be getting the benefit.
I hope it's clear.
warm regards,
Umesh Chaudhary
From India, Delhi
Umesh,
Thanks again for the clarification.
However my question still stands. The employer is not contributing anything to PF, the entire contribution is being made by the employee as his salary is beyond the PF limit of Rs. 6500/-.
So in this case, who gets benefit of the 12% additional being contributed by the employee? The employer can't possibly claim benefit because there is no contribution from their end.
This is an issue that has me stumped.
Regards,
Gaurang
From India, Mumbai
Thanks again for the clarification.
However my question still stands. The employer is not contributing anything to PF, the entire contribution is being made by the employee as his salary is beyond the PF limit of Rs. 6500/-.
So in this case, who gets benefit of the 12% additional being contributed by the employee? The employer can't possibly claim benefit because there is no contribution from their end.
This is an issue that has me stumped.
Regards,
Gaurang
From India, Mumbai
Hi
Don't get bold..lol..
Actually, the benfit is given to only the contributor, here only employee is contributing towards his EPF account from his monthly income, therefore only he'll be getting the benefit while filing the ITR.
Also please clear me, what was the kast pay of this employee..was it less than 6500 earlier..
warm regards,
Umesh Chaudhary
(welcomeumesh@yahoo.com)
From India, Delhi
Don't get bold..lol..
Actually, the benfit is given to only the contributor, here only employee is contributing towards his EPF account from his monthly income, therefore only he'll be getting the benefit while filing the ITR.
Also please clear me, what was the kast pay of this employee..was it less than 6500 earlier..
warm regards,
Umesh Chaudhary
(welcomeumesh@yahoo.com)
From India, Delhi
Hi Umesh,
Not trying to be bold at all mate :oops: ; really sorry if you felt so. I was honestly thanking you for your help.
As for the ITR part, I am now much clearer about the applicability.
As for the employee, yes he was earlier below the 6500 mark and then got a raise. As our company has a policy of contributory PF only for employees below the 6500 level, we offered him the alternate that he can continue to get PF benefit by contributing the full amount himself.
And that led to all this confusion :P
Thanks again.
Regards,
Gaurang
From India, Mumbai
Not trying to be bold at all mate :oops: ; really sorry if you felt so. I was honestly thanking you for your help.
As for the ITR part, I am now much clearer about the applicability.
As for the employee, yes he was earlier below the 6500 mark and then got a raise. As our company has a policy of contributory PF only for employees below the 6500 level, we offered him the alternate that he can continue to get PF benefit by contributing the full amount himself.
And that led to all this confusion :P
Thanks again.
Regards,
Gaurang
From India, Mumbai
Dear Gaurang,
The income tax benefits accrue on the party contributing to PF whether contributory, general or voluntary.
In excess of the limit of Rs 6,500/-, the benefit can only be availed by the employee who is voluntarily contributing to PF at his own behest, being out of EPF & Misc. Provisions Act coverage. The employer in such case gets no benefits under the IT Act.
Under Section 80C of the Income Tax Act, you can reduce your total income by up to Rs 100,000 by making specified investments. PF is one of them.
Hope this clarifies your queries.
Rahul Kumar
From India, New Delhi
The income tax benefits accrue on the party contributing to PF whether contributory, general or voluntary.
In excess of the limit of Rs 6,500/-, the benefit can only be availed by the employee who is voluntarily contributing to PF at his own behest, being out of EPF & Misc. Provisions Act coverage. The employer in such case gets no benefits under the IT Act.
Under Section 80C of the Income Tax Act, you can reduce your total income by up to Rs 100,000 by making specified investments. PF is one of them.
Hope this clarifies your queries.
Rahul Kumar
From India, New Delhi
Dear Gaurang,
If the employee was drawing a salary less than Rs. 6500 and at present his salary is more than Rs. 6500., as per the EPF regulations, both employer and employee will continue to contribute EPF...the employee will contribute 12% and in the same way the employer also needs to contribute. PF has only a forward direction, once one started contributing towards it, it needs to contribute at all times unless one resigns from the job.
I hope it's clear...if your co. is not contributing towards EPF..you are at a fault.
warm regards,
Umesh Chaudhary
(umesh.chaudhary@ril.com)
From India, Delhi
If the employee was drawing a salary less than Rs. 6500 and at present his salary is more than Rs. 6500., as per the EPF regulations, both employer and employee will continue to contribute EPF...the employee will contribute 12% and in the same way the employer also needs to contribute. PF has only a forward direction, once one started contributing towards it, it needs to contribute at all times unless one resigns from the job.
I hope it's clear...if your co. is not contributing towards EPF..you are at a fault.
warm regards,
Umesh Chaudhary
(umesh.chaudhary@ril.com)
From India, Delhi
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