As per Section 2(38) of Income Tax Act, 1961, unless the context otherwise requires, the term “recognised provident fund” means a provident fund which has been and continues to be recognised by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with the rules contained in Part A of the Fourth Schedule, and includes a provident fund established under a scheme framed under the Employees’ Provident Funds Act, 1952 (19 of 1952).
Understanding the meaning of term ‘recognised provident fund’ is important, mainly for the purpose of section 80C deduction under the Income Tax.
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What is Unrecognised provident fund and it’s difference with recognized provident fund?
As the name suggests, it is a fund to which the CIT has given recognition as required under the income tax act 1961. Generally this fund is maintained by industrial undertakings, business houses, banks. etc. The employers contribution over the above 12% of employee’s salary will be included in employee’s salary income.