Dear All,
One of our employee is interested to contribute the PF amount more than statutory limit i.e 12% and wanted to contribute till 25% (VPF) of tataol B + DA.
I required all your help to understnad whether this complete 25% will be exempted from tax or it will be only till 12%
& The rate of interest which we get 9.5% P.A. will be for accumulated amount from our date of contribution (both Employee & Employer) till we withdraw?
Example :- An employee start contribute towards PF from the year 2000 and he wants to withdraw the money or take loan against his PF contribution for house purchase or construction, in that loan interest will be given with that amiount at the time of loan withdrawal or it is only our contribution amount.
If we accumulate the amount for more than five years, it is tax exempted for withdrawal and do we get the amount of total five years contribution with 9.5% interest P.A. (means 9.5% * 5 =47.5 % interest + Both contribution).
Please clarify
Looking forward for positive replies and suggestions.
Regards
Deepak S
From India, Bangalore
1One of our employee is interested to contribute the PF amount more than statutory limit i.e 12% and wanted to contribute till 25% (VPF) of tataol B + DA.
I required all your help to understnad whether this complete 25% will be exempted from tax or it will be only till 12%
& The rate of interest which we get 9.5% P.A. will be for accumulated amount from our date of contribution (both Employee & Employer) till we withdraw?
Example :- An employee start contribute towards PF from the year 2000 and he wants to withdraw the money or take loan against his PF contribution for house purchase or construction, in that loan interest will be given with that amiount at the time of loan withdrawal or it is only our contribution amount.
If we accumulate the amount for more than five years, it is tax exempted for withdrawal and do we get the amount of total five years contribution with 9.5% interest P.A. (means 9.5% * 5 =47.5 % interest + Both contribution).
Please clarify
Looking forward for positive replies and suggestions.
Regards
Deepak S
From India, Bangalore
Aadditional voluntary contribution enjoys all the benefits of PF, except that the company doesn’t contribute an equal amount.
But still, the interest rate is equal to the rate of interest for PF, and the withdrawal on retirement is tax-free.
Regards,
Kamal
From India, Pune
But still, the interest rate is equal to the rate of interest for PF, and the withdrawal on retirement is tax-free.
Regards,
Kamal
From India, Pune
Dear Kamal ,
Thanks for your reply, you have mentioned that it is exempted at the time of retirement, but in case if employee withdraws the money after five years including his VPF will that be exempted from tax.
Regards
Deepak S
From India, Bangalore
Thanks for your reply, you have mentioned that it is exempted at the time of retirement, but in case if employee withdraws the money after five years including his VPF will that be exempted from tax.
Regards
Deepak S
From India, Bangalore
PF withdrawal is not taxable only if a person has been in continuos service for 5 years. You must have completed minimum 5 years of 'continuous' service before making a tax-free withdrawal.
If you withdraw from the accumulated PF account within five years of service, the amount will be taxed.
regards,
Kamal
From India, Pune
If you withdraw from the accumulated PF account within five years of service, the amount will be taxed.
regards,
Kamal
From India, Pune
Dear Deepak
Please advise your colleague to open a PPF Account SBI or in Post Office in which he can deposit upto Rs.70000/- per financial year, which can get 80C Tax exemption. For withdrawal also he need not to depend on anyone and the same can be in his control. He can add anytime without others involvement and request to others.
From India, Kumbakonam
Please advise your colleague to open a PPF Account SBI or in Post Office in which he can deposit upto Rs.70000/- per financial year, which can get 80C Tax exemption. For withdrawal also he need not to depend on anyone and the same can be in his control. He can add anytime without others involvement and request to others.
From India, Kumbakonam
Thank you all for the support and reply.
But Mr.Bhaskar, if you invest in PPF the amount will be blocked for seven years and even you can not withdarw the money in full before that time.
In PPF withdrawl is permissible every year from the seventh financial year of the date of opening of the account, of an amount not exceeding 50% of the balance at the end of the 4th proceeding year or the year immediately proceeding the year of the withdrawal, whichever is lower, less the amount of loan if any.
But in EPF, Even for the housing loan we get 95% of the contribution (both Ee and Er) and even in PF we also get the interest free loan, but in PPF it will be with interest to be repaid.
So for a person who is looking for the money after five years time would definitely go gor the VPF.
This is as per my understanding.
Please correct me if I am wrong.
once again i thank all for their replies and suggestions.
Regards
Deepak S
From India, Bangalore
But Mr.Bhaskar, if you invest in PPF the amount will be blocked for seven years and even you can not withdarw the money in full before that time.
In PPF withdrawl is permissible every year from the seventh financial year of the date of opening of the account, of an amount not exceeding 50% of the balance at the end of the 4th proceeding year or the year immediately proceeding the year of the withdrawal, whichever is lower, less the amount of loan if any.
But in EPF, Even for the housing loan we get 95% of the contribution (both Ee and Er) and even in PF we also get the interest free loan, but in PPF it will be with interest to be repaid.
So for a person who is looking for the money after five years time would definitely go gor the VPF.
This is as per my understanding.
Please correct me if I am wrong.
once again i thank all for their replies and suggestions.
Regards
Deepak S
From India, Bangalore
Dear Friend, A person can enjoy tax exemption only on statutory limit i.e. 12%, any contribution more than this will be taxable. Regards
From India, Vadodara
From India, Vadodara
Dear All,
Adding to the above coments, still need more clarity for further actions, the contribution of PF both from employee and Employer is exempted from tax, whther is that contribution is limited to 1 lakh amount under scetion 80c or it will be treated seperately.
Eg:- If an employee Basic is 1,00,000/- then the PF contribution of 12% will be Rs.1,44,000/- per anumm where as U/S 80c it is exempted up to 1 Lakh. So whether the remaing amount of Rs.20,000/- is taxable or is it exempted?
If the toatal contribution of PF amount is completely exempted, then is there any document available for the same.
Please clarify
Regards
Deepak S
From India, Bangalore
Adding to the above coments, still need more clarity for further actions, the contribution of PF both from employee and Employer is exempted from tax, whther is that contribution is limited to 1 lakh amount under scetion 80c or it will be treated seperately.
Eg:- If an employee Basic is 1,00,000/- then the PF contribution of 12% will be Rs.1,44,000/- per anumm where as U/S 80c it is exempted up to 1 Lakh. So whether the remaing amount of Rs.20,000/- is taxable or is it exempted?
If the toatal contribution of PF amount is completely exempted, then is there any document available for the same.
Please clarify
Regards
Deepak S
From India, Bangalore
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