Understanding PF Deductions: Is It 12% or 24% for Income Tax Calculations?

My gross salary is 18,940/-.

CTC is 18,940 + 1,440 (employer side PF) = 20,380/-.

At the time of IT computing, what will be the total PF deduction from CTC - whether 12% or 24%? Please reply.

Dear,

Only your share, which is 12%, will be counted for tax exemption purposes.

Regards,
J.S. Malik

Dear employer,

Contribution towards PF is not considered your income, so why should you pay tax on it?

Regards,
JS Malik

Dear sir,

Thank you for your valuable response.

My Breakup is Rs. 18940/- per month:
- Basic: Rs. 12000/-
- Special Allowance: Rs. 2100/-
- Project Allowance: Rs. 1200/-
- Conveyance: Rs. 1200/-
- Medical: Rs. 1440/-
- LTA: Rs. 1000/-

Gross Salary: Rs. 18940/-
+ PF contribution by Company: Rs. 1440/-
Total CTC: Rs. 20380/-

Within the given CTC, what is the untaxable PF amount:
2880/- or 1440/-?

Regards,
JS Malik

Pankaj,

IT returns are filed on the basis of Gross Salary, not CTC. Your Gross Salary is Rs 18,940, out of which Rs 1,440 is exempted under Sec 80C of Income Tax.

Saurabh

Also, note that conveyance allowance of up to a maximum of Rs. 9600 per annum is exempt from tax. LTA is also exempt from tax.

Dear all,

Please provide complete details regarding PF (employee and employer) contributions and where we can check our PF balance within the department. Additionally, could you inform me about the timeline for receiving a refund if I claim to withdraw the PF amount?

Regards,
Pramod L

[QUOTE=saurabh.shrivastav;801807]Pankaj, IT returns are filed on the basis of Gross Salary, not CTC. Your Gross Salary is Rs. 18940, out of which Rs. 1440 is exempted under Sec 80C of Income Tax. Saurabh

And this Rs. 1440 is your contribution to PF, which is exempted from tax. For the purpose of IT calculation, you don't take into consideration the employer's contribution to PF as salary income. Hope that clarifies. Thanks, Geeta

Dear Pramod,

Normally, it takes 60-90 days for the processing of PF claims. As far as I know, the balance can be ascertained from the records maintained by HR, or if you are getting pay slips regularly, you can verify. The PF department issues Form 3A, which is the annual statement of accounts that can also be used to verify the balance.

Regards,
Bhavan

Dear All,

Section 6 of the PF Act (other than the establishments declared as sick), contributions of employees are 12% of the basic pay and DA.

Special Allowance is a part of DA that is considered in PF contributions of the employees.

CTC means Cost To Company, which is the total amount expended on the employees, including contributions of the employer for PF, ESIC, and Bonus, etc.

Employers receive benefits on their entire payable contributions for Income Tax.

When computing individual Income Tax, consider only the employee's payable contributions (not the employer's).

Best Regards,

Sunil Wayal

Out of 12 % of company contribution, 8.33 % on basic salary or maximum Rs 542/- per month goes to Employees Pension Fund as per PF act, 1952 and Employees Pension Scheme, 1995. Remaining 3.67 % on basic salary goes to PF account. What you are seeing in the PF statement under employer's contribution is 3.67 % only on basic salary. Balance contribution has gone to Employees Pension Fund. The amount contributed towards pension fund is remitted every month in your pension account, which is maintained by Regional Provident Fund Commissioner, Bangalore. The PF statement does not contain pension contribution details since it is maintained by PF's office, Bangalore rgds Anthony.

The employer's contribution of PF cannot be claimed for exemption by the employee. It is also not taxable (it's not an income). Your contribution towards PF is exempted under 80C - up to a maximum of 1.00 lac.

Regards,
Mr. Yogi