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Tax-exempt employer contribution to PF, NPS capped: Why high earners should opt for VPF, NPS

Tax-exempt employer contribution to PF, NPS capped: Why high earners should opt for VPF, NPS
Tax-exempt employer contribution to PF, NPS capped: Why high earners should opt for VPF, NPS
Combined contribution above Rs 7.5 lakh in PF, NPS and superannuation fund would be taxed from 1 April. 2020

Synopsis

Till now, individuals with high basic salary could have the employer contribute up to 22% of the basic towards PF and NPS (12% and 10% ) and up to Rs 1.5 lakh to a superannuation fund and avail tax exemption on the entire amount.

The Budget has been a shock for high salary earners. On the chopping board is a critical tax benefit. If the employer’s combined contribution to the Provident Fund, National Pension System and superannuation fund exceeds Rs 7.5 lakh a year, the excess contribution would be taxed from 1 April 2021. Earlier, there was no such ceiling.Till now, individuals with high basic salary could have the employer contribute up to 22% of the basic towards PF
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