Provident Fund Contribution and Its Taxability
Statutory Provident Fund
| Particulars | Taxability |
| Employee Contribution | Deduction under u/s 80c allowed |
| Employer Contribution | Exempt From tax Under Section 10. |
| Interest On the Statutory Provident Fund | Exempt From tax Under Section 10. |
| Lumpsum amount received by Employee on retirement | Amount is Exempt from tax under section 10(11) |
Recognised Provident Fund
| Particulars | Taxability |
| Employee Contribution | Deduction under u/s 80c allowed |
| Employer Contribution | Exempt Up to 12% of Salary |
| Interest On the Statutory Provident Fund | Exempt up to 9.5% per annum |
| Lumpsum amount received by Employee on retirement | Amount is Exempt from tax under section 10(12) |
Note
Lumpsum amount received from Recognised Provident Fund is exempt u/s 10(12) if employee has rendered services of 5 years or more. If employee rendered service less than 5 years then exemption allowed in respect of employer’s contribution and interest shall be withdrawn. However in the following 3 cases exemption shall not be withdrawn efe3n though service is less than 5 years
- Employee retired due to ill health
- Employee retired due t shut down of employer’s business
- Employee has retired with the instruction that his balance in recognised provident fund should be transferred to new employer or to NPS A/C referred u/s 80CCD
Amendment by Finance Act-2021
- Exemption u/s 10(11) or 10(12) not available for interest accrued during the previous year to extent it relates to the contribution made by that person/ employee exceeding Rs 2,50,000 in any previous year in that fund on or after 01/04/2021.
- If in that fund employer not made any contribution , then a higher limit of 5,00,000 would be applicable.
- It may be noted that interest accrued on contribution to such funds up to 31/03/2021 would be exempt without any limit, even if the accrual of income is after that date.
Unrecognised Provident Fund (URPF)
| Particulars | Taxability |
| Employee Contribution on URPF | Not taxable |
| Employer Contribution on URPF | Exempt from tax |
| Interest on URPF | Exempt from tax |
Note
Lumpsum amount received on retirement
- Employee contribution- Ignored
- Interest on Employee contribution- Taxable Under the Income From Other Source
- Employer contribution -Taxable under the head Income From Salary
- Interest On Employer5 contribution- Taxable under the head Income From Salary
Approved Super Annuation Fund
| Employee Contribution | Exempt from the tax |
| Employer Contribution | Exempt from the tax up to Rs: 7,50,000 |
| Interest On the Statutory Provident Fund | Exempt from the tax |
| Lumpsum amount received on retirement | Amount is Exempt from tax under section 10(13) |
