Hi Ramesh,
The main difference between a pension and provident fund is as follows:
Under a pension fund, at least two-thirds of the final benefit must be paid as a pension for the rest of the pensioner's life. A maximum of one-third of the final benefit may be taken as cash.
Under a provident fund, the full amount of the benefit available at retirement may be taken as a lump sum cash payment, irrespective of whether the benefit is calculated on a defined benefit or a defined contribution basis.
The tax concessions for employers and members in respect of the two types of funds also differ. The employer may deduct up to 20% of the member's salary for tax purposes under both pension and provident funds. In a pension fund, up to 75% of the member's salary is tax-deductible, while there is no tax-deductible benefit for the member's contribution in a provident fund.
KATYANA