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The following are the types of provident funds.
1.
Recognized Provident Fund (RPF): This
scheme is applicable to an organization which
employs 20 or more employees. An organization
can also voluntarily opt for this scheme.
All RPF schemes must be approved by The
Commissioner of Income Tax. Here the company can
either opt for government approved scheme or the
employer and employees can
together start a PF scheme by forming a Trust.
The Trust so created shall invest funds in
specified manner. The income of the trust shall
also be exempt from income taxes.
2.
Unrecognized Provident Fund (URPF): Such
schemes are those that are started by
employer and employees in an establishment,
but are not approved by The Commissioner of
Income Tax. Since they are not recognized,
URPF schemes have a different tax treatment
as compared to RPFs.
3.
Statutory Provident Fund (SPF): This
Fund is mainly meant for
Government/University/Educational Institutes
(affiliated to university) employees.
4.
Public Provident Fund (PPF): This
is a scheme under Public Provident Fund Act
1968. In this scheme even self-employed
persons can make a contribution. The minimum
contribution is Rs.500 per annum and the
maximum contribution is Rs. 150,000 per
annum. The contribution made along with
interest earned is repayable after 15 years,
unless extended.
Summarized table showing tax treatment of
provident funds
|
Fund |
During Continuity of Job |
Upon Retirement |
| |
Employee’s Contribution |
Employer’s Contribution |
Interest on Provident Fund |
Repayment of sum on retirement,
resignation or termination |
|
RPF |
Deduction under Section 80C is
available. |
Exempt upto 12% of Salary. Thus
Contribution made by employer exceeding
12% shall be added to employee’s salary
Income. |
Exempt upto 9.5%. Interest exceeding
9.5% shall be added to employee’s Salary
Income.
(Current Interest Rate 8.75% dt
06.03.2014) |
Nothing is taxable subject to following
conditions:
1.
Employee left the job after five
years of service OR
2.
Where Period of service less than
5 years, the termination is due to ill
health, discontinuance of business of
employer. OR
3.
here on re-employment, the
balance in R.P.F is transferred to R.P.F
with new employer. [For the purpose of
computing 5 years period, Period of
services rendered with previous employer
shall also be included.]
If none of the above conditions are
satisfied then:
1.
The amount not taxed earlier
shall be taxed in the same manner as
URPF, given below.
2.
Any tax concession (e.g. 80C)
availed by assesses for contribution to
RPF shall now be withdrawn. |
|
URPF |
No deduction under section 80C available |
Any amount of contribution is not
taxable |
Not taxable |
Sum received on retirement/ termination
comprise of following: Employer’s
Contribution and interest there on:
Taxable as Salary Income. Employee’s own
Contribution : It is not taxable.
Interest on employee’s contribution:
Taxable as income from other sources. |
|
SPF |
Deduction under Section 80C is
available. |
Fully
Exempt |
Fully
Exempt |
Fully
Exempt |
|
PPF |
Assessee / Employee can make
contribution to PPF, No concept of
Employer’s Contribution. Deduction under
section 80C available on contribution
made. |
Amount
received
(including interest)
is Fully Exempt. |
WAGE
LIMIT:
PF deduction is compulsory if wages
is equal to or below Rs.15000/- (New
Limit Notification)
CONTRIBUTION:
EMPLOYEE 12%
EMPLOYER 12.5%
ADMIN CHRG 0.86%
|
A/C NO. |
1 (PF) |
2 (PF) |
10 (PENSION) |
21 (EDLI) |
22 (EDLI) |
TOTAL |
|
EMPLOYEE SHARE |
12% |
- |
- |
- |
- |
12% |
|
EMPLOYER SHARE |
3.67% or (12%-
(15000*8.33%)) |
- |
8.33% |
0.50% |
- |
12.5% |
|
ADMIN CHRG |
- |
0.85% |
- |
- |
0.01% |
0.86% |
DUE DATE
(DEPOSITE/RETURN):
PF should be deposit on
15th of every month (5day grace
period upto 21st)
Note:
PF department introduced E-filling system hence
no need to fill manual PF return. PF No. will be
change in every company.
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