Taxability of Unrecognized Provident Fund

It is set up by Company itself i.e. Company opens a private fund and deposit both employee and empoyers share.

However, this fund is not recognized by Commissioner of Income tax

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Employer’s contribution

It is not taxable in the year Contribution is made,

It is taxable in the year amount is received by the employee from fund

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Employee’s contribution

:- No deduction available under 80 C as it is not a recognized fund

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INTEREST ON URPF

Interest on PF is taxable in the year of receipt as Income from Other Sources

This interest has 2 Components

Interest on PF on Employee’s Contribution

It is taxable as Income from Other Sources

Interest on PF on Employer’s Contribution

 Taxes as profit in lieu of salary  (income from salaries)

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