Employer's PF Contribution not shown in Form 16... Is it okay?

Income Tax Income from Salary
1

A teacher in a college has an annual salary of Rs. 7.20 Lakhs if he sums up all the monthly gross salary (that is shown in the salary slips)

But from his salary, 0.60 Lakhs annually is compulsorily deducted and deposited into the PF. Additionally, the college contributes an equal amount of 0.60 Lakhs in PF/pension (EPFO).

It can be said that the person earned Rs. 7.80 Lakhs and Rs 1.20 Lakhs was invested in the PF.
So, form 16 (given by the college) should mention 7.80 Lakhs as income.

Q1. But, the college mentioned Rs. 7.20 Lakhs as income in Form 16. Why? What to do now?

Q2. Since the college has mentioned only 7.20 Lakhs in Form 16, what should be reported as income in ITR: 7.20 or 7.80 Lakhs?

Q3. What is the correct method of Accounting :
a) in the above specific case (College mentioned lower income)?
b) in general cases?

Q4. Will he get a notice from ITD to explain why he reported more income from salary than that mentioned in Form 16 and claimed a deduction under 80CCD(2)?

2

Hi @S_Gupta

  1. The annual salary is 7.2 lakhs only as it is correctly mentioned in form 16.
  2. As form 16 mentions, you will have to report 7.2 lakhs as salary income.
  3. The 60,000 contributed by the employer is toward PF hence it is not considered salary income. (This is how it is reported in all cases)
  4. Since you will be reporting the income as per Form 16 no notice should be received. Employee contribution towards PF will be claimed u/s 80C.
    Employer’s contribution to pension will be claimed u/s 80CCD(2) and employee’s contribution to pension u/s 80CCD(1B).
3

Thanks very much for answering. You solved the problem.

In the above case, When 7.20Lakhs is reported as income, then only 60,000 will be claimed as a deduction u/s 80CCD(1). Net Income would be 6.60Lakhs.

Actually, amount contributed by employer is split into EPF(60000-15000) and EPS(max 15000 annually). EPF can be withdrawn. But EPS component won’t get any interest and out of it, a pension will be offered on retirement.

But, if the college had made Form 16 with 7.80 Lakhs as income, then will two deductions be claimed: 60,000 u/s 80 CCD(1) and 60,000 under 80CCD(2)? Same Net income: 6.60Lakhs.

I think different organisations make different Form16. My one friend is working in a PSU bank.
His form 16 includes the amount contributed by the employer (in NPS) and also mentions a deduction for it u/s 80CCD(2)?

Can it be said that the college made wrong Form16?
and should the college be advised to correct Form16 from next year onwards?

4

Hi @S_Gupta

You should verify your pay slip and CTC. You should report the CTC as your gross income and claim deductions as per the pay slip.

For the bifurcation of sections, you should connect with the organization to understand better.

For any further queries, you can Ask an Expert.

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