How are you friends?
Is everything fine?
Are you enjoying this chapter?
Friends, keep enjoying this chapter because this chapter is
counting its last breaths.
The topic we will discuss today is a very important topic.
The name of the topic is Provident Fund.
I have a claim that you have used this term
Provident Fund somewhere somewhere or the other.
You must have heard about it in movies or somewhere else.
But somewhere you must have heard what is a Provident Fund?
Today I am going to discuss in detail what is a Provident
Fund?
If it is deducted from the salary, will it be taxable or
exempted?
And what will happen if money is withdrawn from there?
We have to discuss a few things with you.
As I ask you a question before every discussion,
I would like to ask you a question again.
Can an employer give a Provident Fund to his employee?
Oh Sir!
How many times will you ask the same question?
What is a Provident Fund?
The entire office is named Provident Fund.
We just have to check what is taxable and what is exempt.
So friends, just pay attention to me.
I will take you to a world where we are discussing about a
Provident Fund.
Come here.
Provident Fund.
Friends, a simple concept is a simple concept is that if
any employee has a salary, then some portion of that salary
is deducted.
For example, if there is a salary of Rs.
1 lakh, the employer will tell you that your salary is Rs.
1 lakh.
Out of that Rs.
10,000 is deducted by the employee.
It means that Rs.
10,000 is contributed by the employee in a fund.
Assume this.
Don't think too much.
This is a fund.
Out of the salary of Rs.
1 lakh,
Rs. 10,000 is deducted by the employee.
Is it clear?
This is a kind of savings.
The amount that the employee is deducting, the same figure
is deducted by the employer.
Who is deducting this?
The employer.
What is the amount of this fund?
Rs. 20,000.
This will be repeated every month.
The employer can deduct Rs.
10,000 or the employer can deduct
Rs. 20,000.
Sometimes the employer can deduct less, sometimes more.
It depends on the setting of the employer.
So, this fund has accumulated
Rs. 20,000.
When you work for months or years, this becomes a fund, a
huge amount.
As I said, this is a kind of savings.
What do you get from this?
Interest.
What do you get from this?
Interest.
What is this interest?
For example, this was Rs.
20,000 and you got Rs.
2,000 interest.
In a way, this became a support for the employee's time.
With his salary, he used to deposit money in a PF fund.
He used to deposit the same amount or more or less, to the
employer.
A fund was formed.
Now, as the balance of the fund was increasing, he was
getting interest on it.
This is a simple concept.
Till the time of retirement, people keep it safe.
Then, Rs.
40 lakhs, Rs.
50 lakhs,
Rs. 1 crore, this kind of fund accumulates.
After retirement, their expenses are fulfilled.
Generally, in common language, this is what it means.
If there is an emergency in your house, there is a wedding,
medical expenses, then you can withdraw money from your PF.
Is the point clear?
No problem.
Let's talk about the types of PF.
One is
Recognized Provident Fund.
Recognized means the one who is recognized.
In Hindustan, only one person is recognized, Sanjay Dutt.
Didn't understand?
Leave it.
His wife's name is Manneta.
Sir, what a joke!
Sorry, I made a mistake.
How many types of PF are there?
One is Recognized Provident Fund.
Recognized means the one who is recognized.
Who is recognized at this time?
The one who is the Commissioner of Income Tax.
We are discussing about Income Tax.
Friends, I am teaching so passionately that our light is
again falling.
You know that my heart is like this.
The topic I teach passionately, our light always falls.
Friends, we say passionately that we should do any work.
When you do any work passionately, you will definitely get
success.
If you have understood the topic of PF, then I consider
myself successful.
If you have understood the topic, then I have become
successful.
That's why this light has fallen to give blessings.
Let's discuss the topic of PF.
One is Recognized Provident Fund.
The one who is recognized, the Commissioner of Income Tax
has made this fund.
I approve it. I certify it.
It is absolutely right fund.
It is legal.
You can deposit your money in it.
Who can deposit? Employee and Employer.
When one is recognized, then somewhere or the other one
will be unrecognized which is not accepted.
One is Superannuation.
Superannuation.
Does it have a name?
Superannuation Fund.
Sir, we have also heard about PPF.
Public Provident Fund.
What is this?
Is it also like PF?
Does the employer deposit money in PPF?
No, friends. PPF is a different thing.
PPF is a different thing.
What happens in PPF, friends?
Employer does not deposit money.
PPF basically, you are depositing your money in an account.
As it increases, you will get interest on it.
And on that PPF, you will get deduction in 80C.
Like you used to get deduction of LIC premium.
Similarly, you will get deduction of that.
For now, there is a limit of 1.5 lakhs.
But keep in mind,
Employer will not come anywhere.
Employer, Master, does not deposit money anywhere.
Employee deposits money for his future savings.
Let's remove this from our discussion.
Because, there is no relationship between
Employer and Employee.
We will talk about salary later when the relationship
between
Employer and Employee is established.
Now, let's discuss about these three funds.
What will happen in these funds?
When Employer deposits money, when will it be taxable in
Employee's hands?
When will it be exempt?
When will it be taxable in Employee's hands?
When will it be exempt?
There is a third fund in this.
When it will be collected, you will get interest.
And interest, you will not get it once.
You will get interest on two funds.
Interest on the 10,000 rupees that Employer deposited in
the beginning.
Interest on that money.
And interest on the 10,000 rupees that Employee deposited.
What is the taxability of these three funds?
Let's try to understand.
If you can see, we are discussing about
Recognized Provident Fund.
We are discussing about
Recognized Provident Fund and RPF which is approved by
Income Tax Commissioner.
Employer's contribution is that Employer can give anything.
It will not be taxable.
But if Employer contributes more than 12% salary,
If Employer contributes more than 12% salary,
If Employer contributes more than 12%, then it will be
taxable in the hands of Employee.
We had taken an example of Rs.
1 lakh.
If you remember, we had taken Rs.
1 lakh.
So, on Rs.
1 lakh,
I had said that it was contributing Rs.
10,000 to Employee and to Employer.
Suppose, if Employer was contributing Rs.
15,000, then it would have been taxable in the hands of
Employee more than 12%.
So, Rs.
3,000 would have been taxable in the hands of Employee.
Why would it be taxable?
Try to understand the logic.
There is a fund, where your employer is contributing money
your future will be safe.
It will be up to 12% no problem.
But when it will be above 12% it will be a benefit for you.
In future, it will be a benefit for you.
In a way, your income will increase.
If you put money there, you will earn interest on that
money.
You will earn interest on the money put by the employer.
In a way, it will become your income.
And when it becomes your income, you will have to make it
taxable in some head.
So, we are taxing the extra in the salary head.
Employee's contribution will be deducted in 80%.
So, the tension is over.
Now, let's talk about interest.
Sir, when the employer put the money, for example, 15,000,
we taxed 3,000, 12,000 is exempt.
What to do about the interest?
So, I am saying about the interest, in the case of the
employee and in the case of the employer, in these cases,
9.5% annual interest is exempt.
On that, whatever is there, it is taxable.
In whose hands?
In the hands of the employee.
Suppose, there was 1 lakh.
Now, on 1 lakh, suppose, the fund of 1 lakh was not
collected.
Slowly, at the end of the year, the fund of 1 lakh was
collected.
So, if you get an interest of up to 9,500 on this fund,
then nothing will be taxed.
But, suppose, 12,000, 12% interest is taken, then 12,000
minus 9,500, how much is this?
On 2,500, it becomes taxable.
In whose hands?
In the hands of the employee.
Any problem?
See, it is written here.
Amount in excess of 9.5% is taxable as salary.
In the contribution of the employer and in the contribution
of the employee.
And, can we withdraw this money?
Remember, I had told you a story, in some chapter, that
there was a poor father, and his son went to jail, and
there was a girl's marriage.
So, what did he do?
He withdrew his PF money.
So, basically, he is withdrawing the money of RPF.
So, in that case, the government says that it is your
money, it is your savings money.
We will exempt this money in your hands.
When you withdraw that money, if there is an emergency in
your house, you withdraw your PF money.
As it is said in old movies,
I gave you my PF money, and what did you do for me?
So, for example, if you withdraw your PF money, then it is
exempted in your hands.
There are some conditions.
What are those conditions?
The condition is that the employee should have worked
continuously for 5 years.
And if he leaves his job before 5 years, then either he
leaves it due to some disease or for some reason which is
not in his hands.
For example, he transferred his money to NPS.
These are 4 cases.
These are general cases.
But you have to understand that if your employer transfers
money above 12%, it will be taxable in your hands.
The employee will get a deduction of 80%.
And the interest of both will be taxable above 9.5%.
Is there any problem?
No problem, sir.
Now, let's talk about the fund which is not recognized.
Unrecognized.
In unrecognized, there is an unrecognized fund where both
the employee and the employer transfer money.
But that fund, that account is not recognized yet.
No matter what the employer does, nothing is taxable in the
hands of the employee.
It's simple.
But because it is not recognized, this is the loss to the
employee.
This is the loss to the employee.
But the benefit is that if the employer transfers Rs.
12,000 to Rs.
1,00,000 or Rs.
50,00,000, then it is not taxable in the hands of the
employee.
But the money that the employee transfers, the deduction of
that money will not be in 80%.
The deduction which was in the case of RPF.
The employee will not get that deduction.
Let's talk about the interest.
The interest that the employer gets in the contribution is
not taxable at the time of credit.
In the case of other sources, the credit interest is not
taxable.
And if we talk about the withdrawal, the employer's
contribution and interest will be taxable as per the salary.
The employee's contribution will not be taxable.
But if you get the interest in the employee's contribution,
it will be taxable in the case of other sources.
This is the point.
It is a simple point.
It is not very complicated.
There is no problem.
It is recognized and unrecognized.
PPF.
We covered it in 80C.
There is no need to read it here.
These are the points.
If you put money in the provident fund, what happens?
Is the point clear?
Thank you.