Ignoring the separate aggregate cap for employer contributions to specified funds, above what percentage of salary does an employer’s recognised provident fund contribution become taxable under Part…
Question and options
Ignoring the separate aggregate cap for employer contributions to specified funds, above what percentage of salary does an employer’s recognised provident fund contribution become taxable under Part A of Schedule XI?
10%
20%
12%
15%
Answer and explanation
Correct answer: C - 12%
Paragraph 6(a) of Part A of Schedule XI to the Income-tax Act, 2025 treats employer contributions to a recognised provident fund exceeding 12% of the employee's salary as income of the employee. Separately, section 17(1)(h) taxes aggregate employer contributions to the provident fund, the pension scheme and superannuation funds above ₹7,50,000 a year.
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