evidence: Contribution to Provident Fund As per law, both the employer and the employee need to contribute 12% of their wages towards provident fund. Till March 2020, employer contributions up to 12% enjoyed a tax exemption. Any contributions in excess of 12% were liable to tax. However, as per Budget 2020, the aggregate employer contribution to Provident Fund, National Pension System and Superannuation Fund in excess of Rs 750,000 per annum and the interest thereon would be considered as a perquisite in the hands of the employee in the year of contribution. The employer has an obligation to consider such excess amount as perquisite in the hands of the employee and withhold taxes thereon. As is obvious, this amendment impacts high-income earning employees who meet the above criteria. [...] The proposed amendment by the government is aimed at rationalising the tax exemption for the higher salaried group who were earning tax-free income. Thus, the government believes that such a move would reduce income disparity. Illustratively, an employee contributing to PF at the rate of 12% on basic salary exceeding Rs 21 lakh annually would need to offer interest accrued on employee contribution in excess of Rs 250,000 to tax. As such it is expected that such a person draws a total salary of about Rs 42 – Rs 50 lakh.