What Is The Full Form Of URPF In Income Tax?
URPF full form in income tax is Unrecognised Provident Fund. This type of provident fund is not approved by the government or official authorities. On the other hand, the employer sets up without following those rules which are mostly applicable to Recognised Provident Funds (RPFs). These funds usually are generated from the employee’s side to save some money for their retirement, but they do not follow regulations provided by the Employees’ Provident Fund Organisation (EPFO).
Operational Mechanics and Features:
Both employers and employees can put money into URPFs, but these funds are not checked or controlled by any government agency. This would mean fund managers setting out the rules for how much money can go in and when it can come out without being bound by any official guidelines.
Tax Implications and Withdrawal Conditions:
Money put into a URPF does not get the tax breaks usually given to recognized funds. For tax purposes, however, the money an employer inputs and the interest it attracts are all taxed as ‘Salary’ at the time of withdrawal. The interest earned on the contribution of the employee is taxed under “Income from Other Sources.” This depicts the informal characteristics of the URPFs.
Things to Think About Before Joining a URPF:
Since there is no government control, joining a URPF can be risky. Money saved in a URPF might be less secure, and there are unclear tax rules when the saved money is withdrawn. That’s very essential to say that anyone thinking of joining a URPF must familiarize themselves with all the rules and give an in-depth thought to its fitting into their retirement plans.