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Which of the following provident fund is approved by the provident fund commissioner?

Which of the following provident fund is approved by the provident fund commissioner? Correct Answer Recognised provident fund

The correct answer Recognised Provident Fund

Key Points Provident Fund:

A provident fund​ is an investment fund that is voluntarily established by Employer and employees to serve as long term savings to support an employee’s retirement.

  • Employee’s contribution:  The amount deducted from the employee’s salary at a rate of 2% – 15%.
  • Employer’s contribution: Besides the usual salary payment made to the employer, an employer will also pay 2% - 15% of employee’s salary into the fund. It is also considered a part of employment welfare.

Important Points Recognised Provident Fund:

  • Any establishment which is recognised by the Commissioner of Income Tax is called as recognised provident fund.
  • To be recognised, an organization of 20 or more members shall invest funds as per the guidelines of PF Act, 1952, and can get an approval from the PF Commissioner of Income-tax.

Additional Information 
Statutory Provident Fund (SPF):

  • This Provident Fund is managed by local governments, government organisations, railways, universities, and other institutions.
  • The Insurance Funds Act of 1925 is applicable to this lawsuit.
  • Employer donations may be tax-free, whereas employee contributions are taxable under Section 80c.
  • The interest provided has no tax implications because it is not considered part of the income.

Unrecognised Provident Fund –

If the commissioner of income tax does not approve the provident fund scheme created by the employer and employee (as mentioned above), then such scheme is an unrecognised provident fund scheme.

Public Provident Fund (PPF) -

The Public Provident Fund (PPF) is an Indian savings and tax-savings mechanism established in 1968 by the Ministry of Finance's National Savings Institute. The scheme's principal goal is to encourage people to save small amounts of money by providing a safe investment with tax benefits.

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Directions : In each of the following questions a statement is given, followed by two conclusions. Give answer :

Statement : Why don't you go to the court if the employer does not pay you the Provident Fund contribution?

Assumptions :
I. Courts can intervene in matters of dispute between employer and employees.
II. It is obligatory for the employer to pay the Provident Fund contribution to the employees.
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