Dear all,
Please clarify the point below. In my CTC, around Rs. 40,320 is the employer's contribution to PF, and Rs. 40,320 is the employee's contribution to PF. My doubt is, will the total amount of Rs. 80,640 be considered as non-taxable income, or only the employee's contribution will be considered non-taxable income? Our accountant says that since both the employee and employer contributions are included as part of CTC, only the employee's contribution is considered non-taxable income, and for the remaining amount, I need to pay tax.
Please clarify the above point.
Regards,
Sasikumar R
From India, Bangalore
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Please clarify the point below. In my CTC, around Rs. 40,320 is the employer's contribution to PF, and Rs. 40,320 is the employee's contribution to PF. My doubt is, will the total amount of Rs. 80,640 be considered as non-taxable income, or only the employee's contribution will be considered non-taxable income? Our accountant says that since both the employee and employer contributions are included as part of CTC, only the employee's contribution is considered non-taxable income, and for the remaining amount, I need to pay tax.
Please clarify the above point.
Regards,
Sasikumar R
From India, Bangalore
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Dear Friend,
These days, the majority of companies follow the CTC concept. In this concept, they include P.F. employer contribution as well.
Your accountant is correct. Only the employee contribution will be considered as tax-saving when calculating the tax liability of the particular employee. In your case, 40,320 will be considered as tax savings.
About tax payment, you need not pay for the remaining P.F. amount. I am confirming that there is no tax on P.F. either on withdrawal or payment as of now.
You may have to pay tax if your total income exceeds the tax limit. The current year's tax limit is Rs. 1,60,000.
This amount, Rs. 1,60,000, will arise after all your deductions like HRA, Conveyance, Medical Allowance, and your savings (PPF, P.F., NSC, LIC, Mutual funds, etc., limited to Rs. 1,00,000). After all these deductions, if your total income still exceeds the tax limit, you have to pay tax according to the Income Tax Slabs.
If you want more clarity, you can ask your accountant; he will clear all your doubts.
Regards,
Sravan
From India, Hyderabad
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86These days, the majority of companies follow the CTC concept. In this concept, they include P.F. employer contribution as well.
Your accountant is correct. Only the employee contribution will be considered as tax-saving when calculating the tax liability of the particular employee. In your case, 40,320 will be considered as tax savings.
About tax payment, you need not pay for the remaining P.F. amount. I am confirming that there is no tax on P.F. either on withdrawal or payment as of now.
You may have to pay tax if your total income exceeds the tax limit. The current year's tax limit is Rs. 1,60,000.
This amount, Rs. 1,60,000, will arise after all your deductions like HRA, Conveyance, Medical Allowance, and your savings (PPF, P.F., NSC, LIC, Mutual funds, etc., limited to Rs. 1,00,000). After all these deductions, if your total income still exceeds the tax limit, you have to pay tax according to the Income Tax Slabs.
If you want more clarity, you can ask your accountant; he will clear all your doubts.
Regards,
Sravan
From India, Hyderabad
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Dear Sravan,
Thank you for your clarifications. It clears all my doubts. So after deducting the employee contribution and all our tax savings, if my income is more than 160,000/-, then I need to pay the tax according to the income tax slabs.
Many Thanks,
Sasikumar R
From India, Bangalore
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Thank you for your clarifications. It clears all my doubts. So after deducting the employee contribution and all our tax savings, if my income is more than 160,000/-, then I need to pay the tax according to the income tax slabs.
Many Thanks,
Sasikumar R
From India, Bangalore
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PF NO Contribution on CTC.pdf