Understanding VPF Contributions: Can They Really Lower Your Taxable Salary?

Hi, Everyone. Will our excess VPF contribution help us reduce the tax from the head salary?

Understanding VPF Contributions and Tax Implications

For example, one person is contributing 1 lakh per month as VPF.

1 lakh x 12 = 12 lakhs. The salary that they receive is 50 lakhs per annum. From HR/Finance from the company, calculate only 38 lakhs rights from head salary for tax. Please advise if they will calculate the whole 50 lakhs for tax.

Even that 12 lakhs has 2.5 lakhs EPF and VPF deduction, then it'll be around 9.5 lakhs excess contribution that will be taxed only for the interest. Is my understanding right?

Can someone clarify how it will be taken?

Understanding Tax-Saving Investments and PF Contributions

Whatever the contribution (including employees' contribution at a higher rate), the total amount, including other tax-saving investments permitted under Section 80C of the IT Act, is Rs 1,50,000 only. Therefore, if you are considering PF as a tax-saving investment, your contribution should not exceed Rs 1.5 lakhs. Remember that Rs 1.5 lakhs shall cover other tax-saving investments and payments like the principal amount of a housing loan, life insurance, fees paid for children's education, etc. But if you think of PF as an investment, certainly, you can choose to pay a higher contribution.

Challenges with EPFO Withdrawals

On the other side of the story, the EPFO was an employee-friendly organization in the past. However, in their current approach, it seems that they find some technical grounds to deny the withdrawal of the sum invested by the members. If you go to the EPFO's office, you will not be permitted to contact the officer concerned. We have to wait like a beggar in the front office of the EPFO, which is manned by Class IV employees! Therefore, it may not be that easy for a member to get the amount back. We can't predict what will happen to our investment if this attitude continues. All these issues arose just after the Supreme Court verdict on the higher pension for higher contributions. Now the EPFO is researching to find a way out of the obligations imposed by the Court.