## Provident Fund
Provident funds are taxed at four points: employer's contribution, employee's contribution, interest on accumulated balance, and lump-sum withdrawal. The treatment differs by fund type.
### Comparison table
| Fund | Employer's contribution | Employee's contribution | Interest on balance | Lump-sum withdrawal |
|---|---|---|---|---|
| SPF (Statutory PF — Govt employees) | Fully exempt | Eligible for 80C deduction (old regime) | Fully exempt | Fully exempt u/s 10(11) |
| RPF (Recognised by CIT) | Exempt up to 12% of salary; excess taxable | Eligible for 80C (old regime) | Exempt up to 9.5% p.a. | Exempt u/s 10(12) if conditions met |
| URPF (Unrecognised) | Not taxable at contribution stage | No tax benefit | Not taxable at contribution stage | Taxed on withdrawal — see split below |
| PPF (open to all) | Not applicable | Eligible for 80C (old regime) | Fully exempt | Fully exempt u/s 10(11) |
Salary for the 12% RPF limit = Basic + D.A. (forming part of retirement benefits) + Commission (% of turnover).
### URPF withdrawal — how the lump sum is split
- Taxable as Salary: Employer's contribution + interest on employer's contribution.
- Taxable as Income from Other Sources: Interest on employee's contribution.
- Not taxable: Employee's own contribution.
### Note 1 — Taxable interest on PF contributions (effective 1 April 2021)
- If an employee's annual contribution exceeds ₹2,50,000, interest on the excess is taxable.
- If there is no employer contribution, the threshold is ₹5,00,000; interest on contributions below this is exempt.
- Interest accrued on contributions made before 31 March 2021 is fully exempt without any monetary limit, even if it accrues after that date.
Yearly threshold summary: ₹5,00,000 where there is NO employer contribution; ₹2,50,000 where both employee and employer contribute.
### Two sub-accounts (from FY 2021-22)
The PF account must maintain:
- Non-taxable contribution account: contributions up to 31 March 2021 and contributions within the yearly threshold thereafter, plus their interest.
- Taxable contribution account: contributions exceeding the yearly threshold and the interest on that excess (after reducing withdrawals from the respective accounts).