How to calculate Employer PF Perquisites?

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In recent times, there have been multiple enquiries about how an Employer PF perquisite gets calculated? Also, let us address the eligibility criteria’s here.

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Hi All,

According to the revised budget, the amount above 7.5 lakh rupees is taxable when an employer’s contribution towards Employers PF, Employer NPS, and Superannuation exceeds 7.5 lakh rupees.

The calculation is as follows:

  1. NPS is exempted to a maximum of 10% of annual basic salary.

  2. Superannuation is exempted up to 1.5 lakh rupees.

  3. PF is non-taxable if the total of employer’s contribution towards NPS, Superannuation and PF does not exceed 7.5 lakh rupees.

If the overall exempted amount exceeds 7.5 lakh rupees, the excess amount of Provident Fund will be calculated as taxable perquisite.

To understand the new calculations, let us consider the following example:

In the above example, 1 lakh rupees of PF is also exempted after calculating exempted limits of NPS and Superannuation. As the maximum limit is 7.5 lakh rupees, the remaining 2 lakh rupees of PF will be considered as taxable perquisite.

Hope the information is helpful.

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Dear Team
Thanks for the information. The 2 lac excess considered as PF Perquisite is for the whole year . But in system it is credited / considered at in a particular month and which is part of eTDS return to be reported as monthly income.
I have 3 queries

  1. Is it correct - Reporting of 2lac as one month income.
  2. If the employee leaving the orgn - the PF perq may not be applicable for him. How to deal with with it. In Form16 the Part A & Part B will not match with the income.
  3. Is the PF perq should be reported as Gross Income of the month in etds return.
    Thanks & regards
    Jain Seshan
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Please find the below excel calculation to calculate Employer PF Perquisites.

Employer PF Perquisite Calculation.xls (28.5 KB)

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