Employer Contribution to PF - Taxable to employee or not
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Employer Contribution to PF - Taxable to employee or not

ana_sky Started The Discussion:

Dear All

I am in urgent need of clarification of a query. My Query is that whether the employer contribution to PF taxable to employee (as that is also a kind of income to the employee)
Please clarify.
Looking forward to your replies ASAP.

Thanks
ANA

amol.agaskar - Member Since: Sep 2006
Quote:
Originally Posted by ana_sky
Dear All

I am in urgent need of clarification of a query. My Query is that whether the employer contribution to PF taxable to employee (as that is also a kind of income to the employee)
Please clarify.
Looking forward to your replies ASAP.

Thanks
ANA
Recognised PF:

It is a scheme to which the Employee’s Provident Funds and Miscellaneous Provisions

Act, 1952 applies. According to this Act, any establishment, which employs 20 or more persons, is obligated to register under the Act and start a PF scheme for the employees in the organisation. Such scheme has to be approved by the Provident Fund Commissioner as well as the Commissioner of the Income Tax.


Taxability:

Employee’s contribution: rebate u/s 80C is available

Employer’s contribution: exempt up to 12% of salary, excess of 12% to be included in gross salary.

Interest on PF: exempt u/s 10 up to 9.5% p.a Interest credited in excess of 9.5% to be included in gross salary.

amalshere - Member Since: Sep 2004
Dear,

The benefit of employers contibution is taken by the employer while declaring his expense and in no way included in the gross salary of the employee. The taxability of PF can only be considered in case of withdrawal from the fund, other wise in cases whatever the amount contibuted by the employer 12 % or more is not at all taxable to the employee.

Thanks & Regards

Amal Shere

Hafizamir - Member Since: Jun 2014
Dear
Employer contribution is not include according to income tax 2001. The tax ability of PF can only be considered in case of withdrawal from the fund, other wise in cases whatever the amount contributed by the employer more is not at all taxable to the employee.

Taxability:

Employee’s contribution: rebate u/s 80C is available

Employer’s contribution: 1/3 of salary,

Interest on PF: 16% of Interest rate.

vats_lokesh - Member Since: Aug 2007
employer contribution towards recognized pension scheme does not come under groos income of employee and hence not taxable.

Hafizamir - Member Since: Jun 2014
Quote:
Originally Posted by vats_lokesh View Post
employer contribution towards recognized pension scheme does not come under groos income of employee and hence not taxable.
Pension scheme is different thing and employer contribution is different thing. Pension in case will be taxable when he will approved by the FBR. other wise pension will be not taxable. Employer contribution will not be include. In other case employer contribution will be include. Let spouse Employer contribution is 20000. he will not include in income from salary up to 100000, 16 % of interest and 1/3 of basic salary ( Basic salary mean dearness allowance and salary) which amount is less, he will be taxable.

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