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

PPF deductions: employer contributions deductible only if remitted; unremitted contributions disallowed and taxable under tax law.
Deductions for contributions to the Public Provident Fund are available under Section 80C to promote labour welfare and individual savings. Employer contributions are deductible only when actually remitted; unpaid or unremitted employee subscriptions and employer contributions are not allowed as deductions and must be included in taxable income.