For salaried Indians, is employee’s contribution to the Provident Fund exempted from tax? Or is it taxable?

Out of the monthly salary received, some part is cut as employee’s contribution to PF. Is this amount exempted from tax? Or is it included in the standard deduction? On a related note, is ‘anything’ included in the standard deduction? Or standard deduction (of 1.1 lakh for males) is without any conditions?

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  1. In addition to nominal PF monthly deduction, we can contribute voluntarily excess amount to PF – it is income tax exempted.

  2. Your salary includes PF amount. From the salary amount you are paying PF.

    10,000 is your salary
    01,000 is the PF deducted from your salary
    09,000 is the net salary you received.

    But for tax purpose, the tax will be calculated on Rs.10,000.

    The PF will help you to reduce the tax liability. The PF contribution is a tax saving investment. It falls u/s 80C. The maximum deduction u/s 80C is Rs.1 lakh, which contains LIC premium, NSC, PPF/PF, Kisan Vikas etc.,

    2,10,000 is your salary
    1,00,000 is your investment in 80C instruments
    1,10,000 is the net salary after 80c deduction

    That means no tax to be paid. (As 1,10,000 is tax free income)

  3. Yes .. conditions apply.
    PF contribution, under 80C, is exempted up to an amount of 1,00,000=00 annually and not there after.