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“Paying tax is enough to contribute to society”. Not true! Unless you understand the reason for your contribution, where exactly the taxes you pay are going and how much is being deducted, the whole point of tax payment is neutralized. In almost every professional sphere of the world right now, be it the corporate or the government sector, everyone is liable to pay taxes.
But the sad truth is if you ask these taxpayers some absolutely basic questions about the same, more than half of them are clueless. Having said that, the good part is that some people are still curious and want to know what, where, when and how of different types of taxes applicable in the country. Now, here we will specifically talk about the taxes paid by working professionals.
Let us have a look at the top 5 queries that most of the employees come up with when it comes to taxes implemented on benefits schemes:
Can You Claim Refund On Deducted TDS?
The answer is Yes! In compliance with the provisions of IT Act 1961, you have to obtain the Permanent Account Number first, if you already don’t have one. Then just like the easy online TDS payment, you can also claim the refund by filing the return of income.
What Is The Taxability on EPF?
Under Section 80C of the Income Tax Act, there are four kinds of Provident Fund under which the tax deductions are categorized:
- Recognized PF: Section 80C tax deduction on employee’s contribution; contribution to 12% of salary is exempt on employer’s share, above that is added to salary income of the employee; Interest on PF until 9.5% is exempt and above that is added to income from salaries; tax on amount withdrawn at retirement is exempt (subject to certain T&C)
- Unrecognized PF: There is no Section 80C tax deduction on employee’s contribution; employer’s share not taxable; Interest on PF is free from tax; for the amount withdrawn at retirement time, contribution from employer and interest is taxable under the head income from salaries, employee contribution is not taxable and interest on it is taxable under the head income from other sources
- Public PF: Section 80C deduction on employee’s contribution; no tax on employer’s share; interest on PF is exempt from taxes; mount withdrawn on retirement is exempt from taxes
- Statutory PF:
Employee’s contribution is taxable under section 80C deduction; employer’s contribution is not taxable; interest on PF is exempt from taxes and there is no taxability on the amount withdrawn at the retirement time
