Those with high salaries might soon have to shell out income tax on employers contribution under employees’ provident fund (EPF), National Pension System (NPS) and superannuation fund. In the Union Budget 2020, finance minister Nirmala Sitharaman has introduced a cumulative upper ceiling of ₹7.5 lakh for the three investments which give tax benefits.
Those with high salaries might soon have to shell out income tax on employers contribution under employees’ provident fund (EPF), National Pension System (NPS) and superannuation fund. In the Union Budget 2020, finance minister Nirmala Sitharaman has introduced a cumulative upper ceiling of ₹7.5 lakh for the three investments which give tax benefits.
For example, if an individual’s basic salary is ₹30 lakh, aggregate amount of employer contribution could be:
PF employers contribution: 3.60 lakh
NPS: ₹3 lakh
Superannuation Fund: ₹1.50 lakh
Total investment: ₹8.10 lakh
The taxable amount could be ₹60,000.
Employer’s contributions to PF and NPS were tax exempt so far without an amount specific ceiling. This meant that individuals with high amounts of basic salary could contribute 12% And 10% of basic salary without limit and avail tax exemption, Saraswathi Kasturirangan, Partner, Deloitte India, said.
“There is no combined upper limit for the purpose of deduction on the amount of contribution made by the employer. This is giving undue benefit to employees earning high salary income,” Budget documents say…Read more>>
Source:-techiyogiz
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