An employee's contribution to the Employee Provident Fund (EPF) account also earns a tax break under Section 80C of up to Rs 1.5 lakh. This amounts to 12% of salary that is deducted by an employer and deposited in the EPF or other recognised provident funds.
Employer's contribution is also tax free but it is not eligible for deduction under Section 80C. Tax on Returns: EPF interest rate is tax free. ... However employer's contributions cannot be more than 10% of your basic salary + dearness allowance, in order to get the benefit of this section.
As there is no contribution by the employer (i.e., the government), employees of the government sector can contribute a maximum of Rs 5 lakh into their PF accounts in a financial year to earn tax-exempt interest.
There is no legal restriction on the maximum amount invested in an ELSS, though the deduction under Section 80C is limited to Rs 1.5 lakh only.
80C allows deduction for investment made in PPF , EPF, LIC premium , Equity linked saving scheme, principal amount payment towards home loan, stamp duty and registration charges for purchase of property, Sukanya smriddhi yojana (SSY) , National saving certificate (NSC) , Senior citizen savings scheme (SCSS), ULIP, tax ...
Yes, Tax is deducted at source @10% if PF is withdrawn before 5 years of service. However, if the withdrawal amount is less than Rs. 50,000, then no TDS is deducted.
As per the notification, issued on August 31, contributions above ₹2.5 lakh in the Employee Provident Fund (EPF) per year will be taxed. In cases where there is no employer contribution in the EPF account, the threshold will be ₹5 lakh a year.
EPF is a retirement benefit plan specifically for salaried individuals. Both the employer and employee will contribute to this scheme. On the other hand, the PPF account is specifically designed for old age income security to all the individuals.
If both the individual taxpayer and the parent are more than 60 years, the deduction can be availed up to Rs 1 lakh. Any payment made towards preventive health check-ups up to Rs 5,000 also qualifies for tax benefit but it has to be within the overall limit.
It is to be noted that an earning individual cannot have more than one PPF account and one cannot invest more than Rs 1.5 lakh in their PPF account in a particular year. ... This will help the earning individual to invest in PPF up to Rs 3 lakh per annum (Rs 1.5 lakh in self and Rs 1.5 lakh in wife's PPF account).
Employee contribution to EPF: 12% of salary. Employer contribution to EPF: 3.67% of salary. Employer contribution to EPS: 8.33% of salary subject to a ceiling of Rs.
In Union Budget 2021-22, the finance minister announced capping of tax-free annual PF contributions to ₹2.5 lakh to avail tax-free interest income, but later raised this limit to ₹5 lakh for such funds where employers do not contribute, a move that benefited only government employees, the two said on condition of ...
Cost to the company is calculated as the total of the employee's direct and indirect benefits. Thus CTC will include Basic pay, all allowances/perquisites and provident fund contribution.
As per the Employees Provident Fund Act, the employer's share cannot be deducted from the member. Also, it cannot be recovered from the salary of employees.
Is EPF a part of 80C? - Quora. Yes, EPF of employee contribution is a part of 80C. If you planning for tax saving under 80C (maximum saving 1.5 lac under 80C) than you have deduct your EPF contribution first than for rest you may start your planning.
Both are safe due to statutory backing. But EPF is riskier due to equity exposure in it. The EPFO declares the EPF rate every year based on the returns of the EPF corpus. The current EPF rate is 8.50% while the current PPF rate is 7.1%.
You can avail loan against the balance in your PPF account. The maturity proceeds received from both EPF and PPF accounts are tax-free. Both PPF and EPF are government schemes. They are tax-saving options covered under Section 80C of the Income Tax Act, 1961.
As per the old rule, legally you are not allowed to open two PPF accounts. One person must have only one PPF account. Suppose you knowingly or unknowingly opened two accounts in Post Office, Bank or one in the post office and another in a bank, then the SECOND account will be treated as an irregular account.
The rule requires all PF accounts to be split into separate accounts – one with the taxable contribution and interest earned on that component, and another with the non-taxable contribution that shall include the closing balance of the PF account as on March 31, 2021 and all fresh non-taxable contributions and interest ...
PF New Rules: The new PF rules prescribed by the EPFO include PF-Aadhaar linking, maintenance of two PF accounts, rise in insurance benefit under EDLI scheme and adding a nominee to the employee's PF account among others.
The EPF maturity amount is tax-free, if you are in the continuous service of more than five years. ... You have to return back the tax deduction in case of early withdrawal from the EPF contribution.