Provident Fund

Recognized Provident Fund:

Employee’s Contribution: Deduction under Section 80C is available.

Employer’s Contribution:  Exempt up to 12% of Salary. Thus Contribution made by employer exceeding 12% shall be added to employee’s salary Income.

Interest on Provident Fund: Exempt up to 9.5%. Interest exceeding 9.5% shall be added to employee’s Salary Income

Amount withdrew at retirement time: Exempt subject to certain conditions*.

Unrecognised provident fund:

 Employee’s Contribution: No deduction under section 80C available.

Employer’s Contribution: Any amount of contribution is not taxable

Interest on Provident Fund: Not taxable

Amount withdrew at retirement time: Contribution from employer and interest on that is taxable under the head Income from Salaries; Contribution by an employee is not taxable, and employee’s contribution interest is taxable under the head Income from Other Sources.

Statutory Provident Fund:

 Employee’s Contribution: Deduction under Section 80C is available

Employer’s Contribution:  Any amount of contribution is fully exempt.

Interest on Provident Fund: Exempt

Amount withdrew at retirement time: Exempt

Public Provident Fund: Deduction under section 80C available.

The amount received (including interest) is Fully Exempt.

*Conditions:

1. Employee leaves the job after five years of employment; or
2. Where the service period is less than five years, the reason for termination is discontinuance of employer’s business or ill health; or
3. The balance in RPF is reassigned to RPF with the new employer on re-employment.