Provident Fund :-
This fund is maintained by a govt. and private organizations
for the benefit of the employees. This fund is consists upon the following :
I)
Contribution of the employee
II)
Contribution of the employer
III) The
interest credited
Every month a particular amount is deducted from the
employees salary. Generally employer also contributes the same amount in this
fund.
Provident fund is invested in profitable business. So the
amount of interest is credited in this fund. At the time of retirement the
whole amount paid to the employee.
KINDS :
1.
Govt. Provident Funds :-
It is maintained by Govt. and sami govt. organizations :
Example : I) Federal Govt. ii) Provincial Govt.
a) Employees contribution to this fund is chargeable to tax.
b) Employer contribution is not included in salary and not
chargeable to tax.
c)
Interest on provident fund is not included in
salary and not chargeable to tax. d) The amount paid to the employee at the time of retirement is not taxable.
2.
Recognized Provident Funds :-
This fund is maintained by a private organizations after
completing the conditions prescribed by law.
For the recognition of this fund application is submitted to
the income tax commissioner. If the grants recognition to such funds then it is
called recognized provident fund. This fund is beneficial for the both the
employer and employees.
Treatment :-
I)
Employers contribution is not included in the
salary and it is taxable.
II)
Employees contribution is included in the salary
and it is taxable.
III) Interest
credited to this fund is not included in salary and the rate of interest is
exempt up to 16% or 1/3 of the salary.
IV) The
amount of fund received by the employee is tax free.
3.
Unrecognized Provident Fund :-
If the private organization maintains such fund without the
recognition of the income tax commissioner, it is called unrecognized provident
fund.
Treatment :-
I)
Employees contribution is included in the salary
and not taxable.
II)
Employers contribution is not included in the
salary and also not taxable.
III) Interest credited is also not taxable.
At the3 time of retirement such amount received is
taxable to the extent of employers contribution is taxable and interest there
on.
5 comments:
What can I do, if my PF withdrawal or transfer request is stuck and is not getting completed?
A employee is contributing his PF according to PF norms, after one or more year employee got promoted and gets increment on his salary.Now employee don't want to contribute PF from his salary. ..
Check fraud is the biggest challenges facing businesses. With the development of computer technology it increasingly easy for criminals, either freedom or in organized gangs, to manipulate checks in this a way as to deceive innocent victims expecting value in exchange for their money.
What are the benefits provided under Employee Provident Fund Scheme?
Provident Fund Management System
Nice article it is vary useful for all...
Provident Fund Management System
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