07-21-2011, 06:23 PM
Employer's contribution will not be added to employee's salary and no tax is charged to it at time of contribution from employee.
Subsequently at the time of payment to employee from provident fund following procedure will be adopted
- If EPF is registered with tax commissioner, no tax will be levied at any amout at the time of payment to employee. its exempt
- If EPF is unregistered then employers contribution+ total interest income credited to employee's account is added to the salary of employee in that year in which payment is made, and its accordingly taxed in salary income.
Benefit of getting fund registered are
1) Employers contribution and interest becomes exempt from tax and its benefit to employee.
2) Employer can charge its contribution to fund as an expense in its accounts, otherwise for unregistered funds this expense in inadmissible for employer.
Hope it sloves ur problem!
Subsequently at the time of payment to employee from provident fund following procedure will be adopted
- If EPF is registered with tax commissioner, no tax will be levied at any amout at the time of payment to employee. its exempt
- If EPF is unregistered then employers contribution+ total interest income credited to employee's account is added to the salary of employee in that year in which payment is made, and its accordingly taxed in salary income.
Benefit of getting fund registered are
1) Employers contribution and interest becomes exempt from tax and its benefit to employee.
2) Employer can charge its contribution to fund as an expense in its accounts, otherwise for unregistered funds this expense in inadmissible for employer.
Hope it sloves ur problem!
