Reason for deductions of PPF

[Poornima Gupta]

Under the Section 80C of Income Tax Act, 1961, there are deductions provided to assesses in respect of contribution to PPF Why government is promoting PPF and what is the benefit for the users?

[DR.MARIAPPAN GOVINDARAJAN]

PPF is labor welfare measure. It is savings on the part of the labor/employee. The PF Act provides to recover subscriptions from employee and also to contribute by the employer in certain percengaes. Many of the employers do not remit the amount recovered from the employees and also their contribution to the Department regularly and they made default. The contribution paid by the employer is deductible expenses under the Income Tax Act. If the PF dues are not paid in time the same will not be allowed as deduction and they have to pay income tax on that portion also.

AI Summary

Employers' Late Remittance of PPF Contributions Leads to Denied Tax Deductions, Increasing Income Tax for Employees. Under Section 80C of the Income Tax Act, 1961, contributions to the Public Provident Fund (PPF) are deductible, promoting savings for employees. The PPF is a labor welfare measure that involves both employee and employer contributions. Employers often default on remitting these contributions to the Department, which affects tax deductions. Contributions paid by employers are deductible expenses, but if not paid on time, they are not allowed as deductions, resulting in additional income tax liabilities.