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POSTED BY ON October 22, 2010 5:01 am ONE COMMENT
Hi,
I need clarifications regarding EPF and PPF.Thanks in advance.
1.Currently I contribute 12% of my basic for the EPF and Company contributes the equivalent amount for EPF.I understand the total contribution will be given a interest rate of 9.5 by Provident Fund Organisation for Financial year April 2010 – Mar 2011.
What are the advantages of contributing an additional percentage to the EPF ?.My Company has informed me they match only mandatory contribution ( 12% ).Will the addtional amounts contributed to EPF fetch the same interest rate ?.Will they be tax deductible for that financial year / Is there any limit for Income tax deduction for EPF Contribution ?.
2.I understand the maximum tax deductible contribution to PPF will be 70000 .What happens if I contribute more than this amount in a financial year ?.
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1. Although you can invest more than 12% contrbution which will fetch teh same interest but it has following implications:
a) Any contribution by your employer above 12% is taxable and so they are matching only 12%
b)The maximum deduction in case of EPF is Rs.1 lakh as it falls under section 80 (C).Any contribution above this is added to your income
c) any interest paid above 9.5% is taxable in a particular year
2. In PPF maximum limit of contribution is 70000 per year.You cannot invest more than this.