Direct Tax Law 2010 (Solved)

Treatment of Recognised Provident fund:
Particulars
RPF
1. Employee's/ assessee's contribution
Deduction u/s 80C is available from gross total income subject to the limit specified therein
2.Employer's contribution
Exempt up to 12% of salary. Amount in excess of 12% is included in gross salary.
3. Interest on Provident Fund
Exempt u/s 10 up to 9.5% p.a. Interest credited in excess of 9.5% p.a. is included in gross salary.
4.Repayment of lump sum amount on retirement/ resignation/ termination
The accumulated balance due and becoming payable to an employee participating in a recognised PF shall be exempt in the following case in Rule 8 of part A of the fourth schedule
1.  In the case of an employee who has rendered continuous service of more than 5 years or more.
2.  In the case of an employee whose service has been terminated by reason of the employee ill health or by contraction or discontinuance of the employers business or other reason beyond the control of employee.
3.  In the case of employee who obtains the employment with any other employee who maintains any recognised Provident fund to which the accumulated balance becoming due and payable is transferred.
4.  Where the accumulated balance becoming due and payable is so transferred , the period of service under the former employer shall also be included in calculating the continuous service .

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