InvestorQ : If you shift to the new tax regime, I suppose it means that my employer contribution to the provident fund will still be tax free? Is that correct?
Neelam Naik made post

If you shift to the new tax regime, I suppose it means that my employer contribution to the provident fund will still be tax free? Is that correct?

Answer
user profile image
Priyanka N answered.
7 months ago


That is only partially correct because there is an upper limit to the exemption. The fine print of the budget clearly indicates that the CBDT has put an upper limit of Rs.7.50 lakhs for employer contribution towards the long term retirement and superannuation facilities of the employee. This limit is the combined and is applicable to the aggregate for contributory provident funds, NPS (National Pension System) and the Superannuation Fund contribution by an employer during a particular fiscal year. That puts clear limits on what employees could have enjoyed in terms of tax free long term-income. Also remember that this is the overall limit and covers employer contribution to CPR, pension plan and superannuation. All three are together limited to Rs.7.50 lakhs per year.