Payment from Statutory and Public Provident Funds (SPF/ PPF/ RPF) - [Section 10(11) and 10(12)] - Income Tax - Ready Reckoner - Income Tax

VARIOUS PROVIDENT FUNDS Particulars SPF PPF RPF URPF Employer s Contribution Fully Exempt N.A. In excess of 12% of salary* is taxable. But the Govt. has further put a combined cap of Rs. 7,50,000 retirement funds of the employee (i.e. RPF, Superannuation Fund NPS). therefore, in excess of Rs. 7,50,000 is taxable in hands of employees u/s 17(2)(vii). Not taxable at the time of contribution Employee s Contribution Deduction u/s 80C available Deduction u/s 80C available Deduction u/s 80C available Not eligible for Deduction u/s 80C Interest Credited Fully Exempt Fully Exempt In excess of 9.5% is taxable as salary --- Amount received on retirement, death etc. Fully exempt u/s 10(11 ) Fully exempt u/s 10(11) Fully exempt subject to conditions u/s 10(12) Interest on Employee s contribution is taxable u/h. IOS Employee s contribution and interest on such contribution is fully taxable as salary u/s. 17(3) *Salary = Basic Pay + DA (if forming part of retirement benefits) + Comm. (if based on % of Sales Turnover) SECTION 10(11) AND (12) PAYMENT FROM PROVIDENT FUNDS The following payments received by an assessee will be fully exempt from tax: Statutory Provident Fund (SPF) Public Provident Fund (PPF) Accumulated balance RPF payable to an employee subject to certain following conditions Condition 1 Employee has rendered continuous service for a period of 5 years or more; Condition 2 Where employee has not rendered continuous service for a period of 5 years or more, then his service must be terminated by reason of ill health or discontinuance of the employer s business or other cause beyond the control of the employee Note: If employee gets transfer of balance of RPF with another employer who also maintains RPF then the period of service under former employer shall also be included in calculating the period of continuous service. Proviso inserted by Finance Act, 2021 - Taxability of Interest on statutory provident fund where payment is exempt [w.e.f. AY 2022-23] 1st Proviso : Exemption u/s 10(11) u/s 10(12) shall not be available in respect to the interest income accrued during the PY in the account of person to the extent it relates to the amount or the aggregate of amounts of contribution made by the person exceeding Rs. 2,50,000 in any PY in that fund, on or after 1st April, 2021, computed in such manner as may be prescribed. 2nd Proviso : If the contribution by such person is in a fund in which there is no contribution by the employer of such person, the provision of the first proviso shall have the effect as if Rs. 2,50,000 had been substituted by Rs. 5,00,000. Section 10(12A) :- any payment from the National Pension System Trust to an employee on closure of his account or on his opting out of the pension scheme referred to in section 80CCD is exempt, to the extent it does not exceed 60% of the total amount payable to him at the time of such closure or his opting out of the scheme. Section 10(12B) :- any payment from the National Pension System Trust to an employee under the pension scheme referred to in section 80CCD , on partial withdrawal made out of his account in accordance with the terms and conditions, specified under the Pension Fund Regulatory and Development Authority Act, 2013 and the regulations made thereunder is exempt, to the extent it does not exceed 25% of the amount of contributions made by him.