Withdrawal from Provident Fund (PF) Account before Completion of Five years taxable?
Withdrawal of Provident Fund may attract Income Tax. TDS @ 10% will be deducted from the withdrawal amount subject to monetary limit of Rs 50,000, if the withdrawal happened before completing five years of subscription. Tax officials have cited a rule in the 1961 Income-Tax Act that taxes PF withdrawals by employees before completing five years of contributions into the EPF is taxable.
In most cases, the accumulated PF balance is withdrawn at the time of retirement, and therefore, not taxable in the hands of the individual. However, in certain cases like change in employment, an individual may even withdraw the PF balance earlier. The point one needs to remember is that the amount received from such PF is not exempt from tax in all cases. Only under the circumstances listed below will the amount withdrawn from PF be eligible for such exemption from tax.
- If the employee has rendered continuous service with the employer for five years or more. Again, if the balance includes amount transferred from the individual’s PF account maintained by previous employer(s), then the years of continuous service rendered to the former employer(s) would be included for the purpose of computing the five-year period.
- If the employee has not rendered continuous service of five years, but the service is terminated by reason of the employee’s ill health or discontinuance of the employer’s business or reasons beyond the control of the employee, the amount will be tax-exempt.
- Another tax-exempt case is when, on the cessation of the employment, the employee finds another job and the the accumulated PF balance is transferred to his individual PF account maintained by the new employer.
In short, where the PF amount is withdrawn before five years of continuous service, it may be taxable in the hands of the individual as if the fund was not recognised from the start of the contributions. In such a case, payment received by the individual in respect of the employer’s contribution along with the interest accrual thereon is taxed as “salary”. Interest on the employee’s contribution is taxable as “other income”. Payment received in respect of the employee’s own contribution is exempt from tax (to the extent not claimed as a deduction earlier).
I-T provisions provide that the trustees of a recognised PF or any person authorised by the regulations of the fund to make the payment of the accumulated balance to the employee should deduct tax at source while paying the amount. Further, the person liable to deduct tax has to issue the certificate of tax deducted at source (Form 16) within the specified time frame to the employee depicting the details of taxes withheld from the accumulated PF balance and also comply with other salary-related compliance necessities. So the next time you think of withdrawing your PF, you must as an individual also assess whether the same is taxable or exempt.
——————
I worked with a private company for four and years and nine months. I have given a provident fund (PF) withdrawal request to my ex-employer. Will the PF amount be taxable?
We understand that the PF maintained by your former employer was a recognized PF. As per the provisions in the Income-tax Act, if the employee has rendered continuous service with his employer for five years or more, then the withdrawal of accumulated balance from such PF is not taxable at the time of termination.
Since the period of your services with the ex-employer is four and a half years which is less than five years, you shall be liable to tax on the amount withdrawn from your PF. In addition to the normal tax payable by you, you will be required to pay all the tax concessions availed by you so far on account of contribution to such recognized PF. Further, the total employer’s contribution plus interest thereon, which was not taxed earlier, shall be taxable as profits in lieu of salary.
However, if the accumulated balance in your PF account is transferred to your recognized PF account maintained by the new employer, no tax liability shall arise due to such transfer.
Image courtesy of Mister GC at FreeDigitalPhotos.net
Hi,
i will be completing my 3 years o service in May 2015 and i wish to withdraw my EPF balance as will be contuining iwth my education. will my balance be taxed?
I have completed 13 years as contnuous service span in PF Trust.Now,I would like to take non-refundable loan from the PF trust for purchase of a house.Please clarify wheather this amount is taxable?
Hi Sir,
I worked in Private limited company from 2010 to 2013 in this period they deduct the PF every month on my salary. Now i am decided to withdraw my PF amount.
But i having a problem they not sign withdraw form. i asked them more time there is response.
What Can i do now ?
there is any possibilities to withdraw my PF amount without Employer signature.
Kindly help me that amount will help to my family.
Please do the needful.
hi – i have been contributing the PF to a trust since 2004 – 2008 and then i moved outside india on secondment and continue to contribute the PF till 2012, i am still working outside India but my secondment is over. Want to understand if i withdraw my PF today, will it be taxable?
Hi,
I worked for an organization for 4 yrs and 10 months 20 days suddenly they terminated me saying restructuring their organization.I have an idea for withdrawing my PF amount.I am not going to work further.
THE PF IS MAINTAINED BY THEIR OWN TRUST
now they are telling that they will deduct 30% amount as tax.is it correct for just 40 days that too they sent me out and deducting 30% of my amount wht i have to do
I have resigned my job 3 months ago. When I asked my ex-employer for PF withdrawal, they are saying once UAN is alloted PF withdrawals cannot be made. Please let me know if I can withdraw or not? Thanks in advance.
Dear Sir,
My am into new employment wherein company is not deducting any amount for PF.
In my old organisation, PF was deducted wherein my service was for more than 5 years. My question to you is:-
1. If I withdraw this amount will it be taxable?
2. If I do not withdraw this amount for certain number of years what will be the outcome?
3. If I withdraw this money after 5 years and during this period there is no existence of my previous employer what will be the outcome since I came to know that on withdrawl slip a signature is required of employer?
4. From the PF amount deducted, certain amount goes into PF and balance into pension scheme. What will be the outcome from taxable / non taxable point of view?
You reply will be eagerly awaited.
Rgds
Nikhil
One of my client who is expat comes to india on secondment in 2009 and PF is deducted in india from his salary but in june 2013 due to DTAA, PF is not deducted from his salary.
Now, he withdraw such sum from his PF account.
My ques is whether the withdrawl is taxable or not.
suppose if the new employer does nor maintain PF Account & the employee has joined the new organisation and the employee has worked for less than five years in his old organisation.
Does is he liable to be taxed even though he does not wish to withdraw amount from his PF Account and he continues to render service to his employer of more than 5 years. Afterwards he wants to withdraw the money from his PF Account so will he liable to get taxed????
Sir,
I worked in an organization till four months and after that left.
My P.F amount was being deducted from my payment for that working period.
So please conform me that Can I claim to take my amount refund.
Please suggest me.
Awaiting for your reply.
regards
Bharat Prakash.
mob.9867954269
i have worked 29 dec 2009 to 26 march 2012 in a company and pf contribution from jan 2010 to apr 2012 and leave the job and join in other company on 12 apr 2012 and leave the job on 30 nov 2014. the pf contribuion for this company from may 2012 to dec 2014. Last company pf will be transfered in latest pf account.now i withdrowl my pf from PF departement.they donot deduct any tds from this pf amount .can u tell me that this PF amount will be taxable or not
hi
i am working in private firm and now i am joining a new firm
i amcompleting 3 years with my current job
what will be the tax didcuted if i withdraw my pf and also pls confirm me w
will it be taxeble i i dont trnasfer and keep my pf pending
I`m working with a private organization from last 9 year, How much tax i need to pay if i left the job after nine year to my PF.
Dear Sir,
I worked less than 5 years and now my current status is that i am a non resident indian , i just left my employer and am unemployed . I am withdrawing my providend fund from my previous employer but they want to deduct TDS due to tenure less than 5 years. However, i am in Canada and there is a tax treaty between india and Canada specially in case of non resident . Please advise under what clause of the income tax act can i point to them for no tax deduction. Also if tds is unavoidable can u p,s advise which slab i should be considered.
Thanx
Hello Sir,
I was salary employed in IT company and worked for 3.5 yrs resigned and joined in another IT organization. I didn’t transferred my EPF to current organization still with old company and about to complete 5yrs. I would like to go for withdrwal my EPF, so is it taxable? How I can get avoid taxable?
Thanks,
Jaffar
Hi Sir,
I have resigned from my previous job after 9 years, 11 months, at that time i have submit my epf share, It was contratual job. Now I have joined new govt. job. Can i collect full amount of my account of that 9 year, 11months period.
Hello Team,
I have completed 6.5 yrs of service and now self employed. I have resigned in 2013. Wish to withdraw settle my EPFO account. I am located in pune where my epf is of KA.. I neex to clarify few doubts;
1. Do I fill only the form 19 and attest it from my previous employer or from designated official. Will I get full amount after settlement.
2. Waiting period is already over for me as I left job in 2013. But it is still way before my account gets inoperative.
3. Can I send the above form and cancelled cheque and what other doc to concerned office. Will it be fine to send via indian post registered AD.
4. How long will it take for refund..
Thanks.
I worked in privet company for 2 years 9 month. my pf amount was collect in pf trust of company. now i had withdraw my pf amount today but there is deduction of tds @ 20%. my question is how to get refund of this tds amount.
Hi,
I have worked in an organization for 3 years joined as a fresher and after that I joined new organization but neither i have transferred or withdraw my PF yet. Now I want to withdraw this previous PF( whish is a company’s PF Trust), as overall I have completed 5+ yrs but only 3 yrs with the previous company ,so would it still be taxable( since i have not continued 5 yrs with the same organisation though completed overall 5 yrs with 2 different organization)
Please respond.
Thanks,
Mayank K
Hi,
I have worked in an organization for 4 years and 4 months. I know as per rule if I withdraw my PF it will be taxable as I have not completed 5 years. However, if I withdraw after a year or so, would it still be taxable.
Please respond.
Thanks,
Rajesh J
Sir,
I worked in a company for 7 years. After that I resigned that company and joined Govt. organisation on contract basis but on contract basis no P.f. deducted.
I have neither withdrawn nor transferred our P.f. amount till date.
Now i want to know can we deposit P.f amount regularly on existing P.f.account no.
I work in a private institution. My EPF account is more than seven years old. Recently I have withdrawn some amount from my EPF account for marriage of my brother. I want to know whether the amount is taxable or not?
Hi Sir,
I have worked in an organization for 4 years and 4 months. I know as per rule if I withdraw my PF it will be taxable as I have not completed 5 years. However, if I withdraw after a year or so, would it still be taxable.
Please respond.
Thanks,
Amit
Hi,
I have just left one company and joined another.
I served four and half years in previous company.
I want to withdraw my PF, please advise when I should do it.
Should i withdraw now or after completing 5 years, so that TDS is not deducted?
I am currently working and making voluntary contributions to my EPF accoount which I claim for tax exemption. Now if I leave my job before 5 years and do not take up any other job for some reason, say higher education, will the withdrawal I make be subject to tax deduction. Kindly reply as it as an urgent situation. Thanks,
Hi
I have resigned from my company and at the same time I owe the company leased car and have taken some of general purpose advance as well. Can I adjust PF I mean what ever I owe to company is the adjustment possible? Need advice on the same?
Hi,
I have submitted the PF withdrawal application.
on checking out the status i get this
Claim ID : PUPUN141xxxxxx
Status : CLAIM FORM 19 FOR PF SETTLEMENT FOR MEMBER ACCOUNT NO PUPUN003422400000xxxxx HAS BEEN RECEIVED ON 29.10.2014 IS UNDER PROCESS
Claim ID : PUPUN14100xxxxx
Status : Claim Form 10C for Withdrawal Benefit AGAINST Member Account No (PUPUN003422400000xxxxx) has been approved. Payment is under process.
Now is there i am expecting 2 payments?
one for Form 19 and one for 10C for Pension funds?
Sir ,
I worked with private BPO company for 37 months . My contribution to my pf account is 550 pm . After two months from my retirement from that company i have applied for my pf withdraw as i need money for my family member hospitalisation .
Once i have applied i recieved a email from my corporate team that as i didnt complete 5 years service they will deduct TDS from my pf amount . Because of my family suituation i confirm that still i have to withdraw my pf .
Once i confirm through my email i have recied only 5700 as my PF settlement . As per my knowledge 550*36= 19800 . I dont know how much they deducted as TDS . And also i dont know my employer have contributed for me or not .
Iam not satisfied with the amount which i recieved and still i didnt take even single paise from my bank account .
Can you please clarify me regarding TDS deduction .
And how can i came to know that my employer has been contributed for me or not .
Thanks in Advance .
Muthu Kumaran.J
I have moved to USA before 5 years of service completion with job in USA company. Now does PF withdrawal is exempted from tax in this case
plz give my ppf amount
my neighbor work in one concern for 4 month they detected pf amount he actually work 4 years before is it he is eligible to calm the PF amount. he dont know the pf number also.
Dear Sir
I worked for less than five years, but I have withdrawn the PF after 5 years of my service. My employer deducted tax at source showing Salary. Is it Correct? What shall I do? Can the tax be refunded back? Under which section will I claim exemption. Expecting a quick replay.
Thanks & Regards.
I left my previous job in Aug 2010. I neither transferred nor withdraw the PF. Now If I withdraw my PF , will I have to pay income tax.
what is the exact rate of TDS deducted on withdrawal of PF if worked in a organization more than 5 years?
I left my previous job in May 2010. I neither transfered nor withdraw the PF. If I withdraw my PF after May 2015, will I have to pay income tax.
Thanks in advance for helping
Is there a provision which exempts PF withdrawal from Tax if a person leave the employment before completion of 5 yrs but after that remains unemployed for a period of 1 year or more.
Also, what if someone does not complete 5 yrs of service with an employer but withdraws PF 5 years after the PF account was first opened? So someone completes say 3 years of service and then for the next 2 years he does not withdraw his PF and then after the five years are over then he withdraws the amount. What happens then? I think such withdrawal is taxable since the IT Act specifically mentions completion of 5 years of continuous service and it is of no relevance that the withdrawal was done from the account after 5 years from when the account was opened. Please clarify.
Hi,
I worked for 4 years in India and now I have moved to United States from last 6 months.
I have withdrawn my PF and I dont think any TDS is deducted.
I want to know do I need to pay any tax on this PF amount?
Hi…I have been working in various companies since Apr 2005. On every occassion of changing my job, I had got my PF transferred. I am now with HDFC Bank for the last 2 years. I have not gotten my earlier PF transferred to this organisation. I am now thinking of quitting my job and start something of my own. I will be resigning in the next one week.
Request you to please guide me with the following:
1. Should I withdraw the PF that is lying with my previous employer or should I get it transferred. I believe, transfer would take 2-3 months. I might have left HDFC by then.
2. In case I withdraw PF from my previous organisation, would TDS get deducted from it?
Request you to please revert at the earliest.
I worked in a private firm for nearly 2 years & firm had own private trust for PF.
I joined another company which did not have private PF trust.The company has deducted TDS from PF amount 3 months back ,I would appreciate if you pl suggest ,can I deposite the full amount of Previous PF & can TDS be refunded tom by the company or I.Tax deptt If I furnish full detail in my I.Tax return ?
Hello, I worked in India at an employer for 1 year 7 months during which I was paying into the Provident fund. I then moved overseas. I have been overseas for 6 years and now I have withdrawn my PF. The PF office has not deducted TDS. I would like to know if I need to pay any tax on my PF withdrawal for this year in which I have withdrawn, or is that that migration overseas is a reason for tax exemption?
An employee is employed post his retirement at age of 62 years on a contract for 3 years ,he received his pf as a result that contract is over ,is this pf withdrawl taxable ?
Helooo,
I worked with Private company for more than 5yrs and now i want to change my job so i want to withdraw amount from EPF… and i have not transferred the EPF amount to my new job PF account.
If i have withdrawn an amount from old PF account whether it is taxable or not…
I have resigned from my current job my date of joining is 07/08/2006 and my last date in the current company is 15/11/2013. I Want to with draw the amount.i was with the company for 7 years 03 months and 20 days .
if i am withdrawing the PF whether it is taxable or not?
If taxable how much taxable ?
I left my HCL in june 2011 and did not transfer the PF to new employer. In this case if i apply for Pf in july 2016 will it attract tax??
I have left my previous company 1 year back but I have neither withdrawn nor transferred my PF a/c from previous to new employer. I wanted to know can I transfer my old PF a/c to the current one.
Pl. help.
how much time will take after approval of claim form 10c for withdrawal benefit ???
Dear Sir,
I want to know whether PF withdrawal is taxed on receipt basis or accrual ?
Thanks & Regards,
Niyati
Dear Sir,
I was working with two company for more than five years.
I had intimated my new company about old and pf.
last year i withdraw money from PF but previous company deducted the tax on that, now they are giving me letter of continous of five year.
Now how I can claim this TDS refund (under which section)along with my other income.
Hi,
I worked for a company for 5 years, now I re-located to another company in different city in India. Due to my personal situation I want to withdraw the money from my PF account when I talked to previous employer Finance departments they said that, there is Government rule that you can’t withdraw the amount as you are working in another organization inside India so you need to transfer your PF amount to current company organization PF account. This is what a reply I got from them and they are not processing my request. Is there is any rule like that(I don’t think so because my friends got their money). Please advise.
Thanks
Somu
I worked for a company for 4 years (till March 2010), after which I left India. I am currently a non-resident for Indian tax purposes. I have now (in May 2013) withdrawn the monies accumulated in my ex-employer’s PF account and would like to know the taxation in my case i.e. should I not receive the employer’s contribution and interest on it (along with the enployee’s which is anyway tax exemmpt) without TDS, since I am no longer resident in India?
Many thanks in advance