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In most cases, the accumulated PF balance is withdrawn at the time of retirement, and therefore, not taxable in the hands of the individual.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 Only under the circumstances listed below will the amount withdrawn from PF be eligible for such exemption from tax.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In short, where the PF amount is withdrawn before five years of continuous service, it may be taxable in the hands of the individual as if the fund was not recognised from the start of the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.
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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.
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Dear Writer
I have withdrawn one of my PF amount from my 2004 PF account which is not linked to my current account. This PF was active from 2004 to 2005.
My employer has deducted the TDS @ 10%. I have to file my ITR now. I want to know do i need to take the PF amount under salaries, if yes it will be further taxable for balance 20% (as per my Tax slabs), if not then I am getting the refund of 10% TDS deducted.
Please advise.
Ravi
SIR
I AM WORKING WITH A PVT. LTD. FIRM IF I CLAIMED FOR MY PF BEFORE 5 YEAR HOW MUCH AMOUNT WILL BE DEDUCTED. AND WHAT THE RULE FOR WITHDRAW PF BEFORE 5 YEAR .
SIR
I AM WORKING WITH A PVT. LTD. FIRM IF I CLAIMED FOR MY PF BEFORE 5 YEAR HOW MUCH AMOUNT WILL BE DEDUCTED. AND WHAT THE RULE FOR WITHDRAW PF BEFORE 5 YEAR
I have received the PF amount in 2015 april for my previous employment period 2013 ~ 2014. In 2013 end I switched company and for the financial year 2014 ~ 2015 I have settled the tax for income. But when I tried to efile the returns I was able to find the previous pf amount being shown as an income and also the tax deducted from source for it. I also received the form16 document from my previous employer for the pf amount and the tax had already been deducted and credited the remaining account. Now I need to know if I need to include this pf amount into my income for 2014 ~ 2015 and pay the difference. But the difference amount is huge.
Sir,
I left my job where i was EPF, i worked there for 2 years. Again i joined a new organisation within 15 days where CPF is applicable. Can i transfer my all EPF balance to CPF Account ? If No then is it attract tds while withdrawing epf balance money as i left job before 5 years? what is the procedure for withdrawl of epf money?
Waiting for your valuable advice.
its very urgent.
I had withdraw ed my PF from previous company ( where i worked for 2 years). They had already deducted 10% as TDS from the total amount. Do i still need to add the amount that i received under my taxable income from my current company as the earlier company had already deducted the TDS
Still i am working in job i have some problems how to withdrawl my present pf amount
Sir i am working in private instuite how to withdrawl my pf amount
hi,
I was working with an organisation for three and half years .Three months back I got no know that I am pregnant and it is a critical one.So have to leave the job.
Now if I wants to withdraw the PF amount ,it will be taxable? Or it will be considered as ill health ? Do I need to give any proofs for this?
Hi. I have been working with my present company for 2 years. Prior to this, I had 4 years of work experience. The old PF is yet to be transferred to my new company’s PF account. I want to withdraw my PF(the old account by definition has completed 5 years in operation). I have the following queries:
1. Is withdrawal from old account while I am still working legal
2. If no, then can I transfer the same to existing company, and then withdraw citing the reason(in my case, buying a house)
Hi.
I have worked at an academic institute for about 3 years and changed the job. My previous employer had CPF whereas my new employer follows New Pension Scheme. Is is possible to transfer my PF money to NPS as it is or I need to withdraw the amount and have to pay tax. Further, I am having my PPF account so is it possible to transfer CPF money to PPF? Please advise.
Regards
I transferred my PF account from Employer 1 to Employer 2 when I moved companies. I had worked at Employer 1 for two years and at Employer 2 for four years. When issuing a cheque for my PF withdrawal request, Employer 2 erroneously deducted tax, since they forgot to check that the account had been funded for more than 5 years. Now, they are asking me to claim the excess tax in my return.
The problem is that I do not reside in India, do not have any income here and hence, do not file a tax return. What other options are available to me? Is the company liable in this case to give me the tax amount, since they made the mistake? Please advise. Thank you.
If a person renders service for 4 years and 6 months; but does not withdraw the PF immediatley; he withdraws after another one year (total time in PF 5 years and 6 months), will such withdrawl be taxable (as he is withdrawing after 5 years)?
If yes, Will it be taxable if he withdraws after attaining 60 years age, which is another 6 years away.
dear sir
i have left the company(psu) after 2 year of working i withdrawn the pf of my service 2012-2014. is this amount taxable i this financial year 2015-16
Sir
I have been working in an autonomous state govt organisation in contractual mode , which was for 5 years. But the authority terminates me after completion of 4 years . I want to withdraw my PF. Do I need signature of the higher authority for withdrawal of my PF or with my termination letter , can I apply in PF department for complete withdrawal of my money?.
regards
I resigned from Axis Bank and getting relieved in 10 days. I have total service of 4yrs 8months. I applied for PF withdrawl.
As m service is less than 5 yrs, PF amt is subject to TDS.
As Im not taking any job, im eligible to submit 15G.
My doubt is to whom I have to submit 15G?
When I enquired with our bank PF Trust,they saying we have a separate Trust for PF, so you can not submit 15G.
Kindly clarify and help me how to avoid TDS on PF
Hi,
I worked for 3 yrs in an MNC and joined another company at which I worked for 4 years and 6 months now. I had done by PF transfer from my first company to the one which I am working at present.
So altogether I worked for 7 years and 6 months without withdrawal of PF amount.
If I resign from the present company and apply for PF withdrawal, will I be taxed ?
Please let me know.
Dear Sir
I am resign from my previous co on 15 march 2015 & fill Pf withdraw form on same date
At that time this rule is not enforce
I am not received my pf amount till date
It may be received in next mont, Is they deduct Tds on my pf amount
Sir,
I have worked in a central PSU for 4 years 11 months and 03 days to join another central PSU. I have not withdrawn the PF till date which make my PF account more than 5 years. If, I withdraw my PF now, the amount will be taxable or not. Kindly help.
Dear Sir, I worked for an MNC organization for for yrs. after leaving my job I did not applied for my PF withdrawal and left my PF account dormant for 1 year so that it could complete 5 yrs.Now It has completed 5 yrs (4 yrs job + 1 year dormant). My question is if I withdraw my PF tax will be deducted or it will be tax free as I’m withdrawing after fiver yrs of pf subscription date.
Sir,
I joined a private company 4 months after retiring at the age of 60 years from my PSU employer.The appointment was “will retire from the services of the company on completion of 65 years ” and accordingly PF was deducted along with the equal contribution from the company deposited in my account.I will therefore retire from the services of the company after completing only 4 years and 8 months in service (less than 5years). My queries are as follows
(1)Will TDS be deductible on receipt of payment from PF and will I have to pay income tax on this amount ? (2)Can I leave it in the PF account and seek refund after completing 5 years only to circumvent the relavant tax rules.?
Dear Sir,
After a service of 4 years and i have withdrawn all the PF balance and left the job for higher studies. Withdrawal PF is taxed at the @ of 10 % as a TDS. I have total take home salary including PF is 4 Lacs in FY 15, Can i claim refund of TAX while filing the return.
regards
Raman vig
Hi Sir,
I have worked with a company for 4 years and 4 months from Jul-2010 To Oct-2014, now I am working for another company where I am not deducting my EPF. I am in need of money for medical treatment of my mother. If I submit my EPF withdrawal form in the month of Aug-2015 will it be taxable & TDS on same is applicable or not ?.
Waiting for your advise,
Thank you,
– See more at: https://taxguru.in/income-tax/withdrawal-provident-fund-account-completion-years-maturity-taxable.html#sthash.JLwgxxkT.dpuf
Respected Sir,
I am working in a private organization and both employer’s as well as employee’s share gets deducted from my CTC. Duration of service rendered is two years. Now there are two scenarios :
First, if due to some reasons if company asks me to resign and then if I surrender my p/f, would it be taxable and how much ?
In second scenario, if I resign on the grounds to start my own business and then surrender my p/f, would it be taxable and how much ?
Waiting for your reply which can also be sent directly to my email id which is daljit31@rediffmail.com
Warm regards,
Daljit.
I worked for 28 months with the first company and 15 months with the second company. I got the balance accumulated in the PF account of the first company transferred to the second company’s account. Now though I have joined the Govt. of India and have been working there for 30 months. If I want to withdraw my PF money would tax be deducted.
Hi Sir,
I have worked with a company for almost 3 years and 9 months, now I am planning for my higher studies and hence I cannot contribute for the EPF now on. So as per the rules if I withdraw my PF before 5 years of continues work TDS is applicable but my question is, can I continue my PF account for the rest 1.3 years without paying the PF amount every month and withdraw the balance amount once 5 years is reached so that TDS will not be applied??
Waiting for your advise,
Thank you,
Hello,
I am working in a company from 2007 onwards. I want to withdraw PF for my marriage. Can I do so and what is the procedure for that? Also what will be the taxability of such removal?
Hi,
I have completed 5 yrs of continuous service but my PF subscription commenced from the succeeding month of joining. For eg I joined 15 jun and subscription commenced from Jul. Would the period be computed from date of joining or from subscription month for calculating 5 yrs?
Thanks
I worked with an organization july 2011 to sept 2014.since i have not withdraw my PF and its almost 3 years 3 months. if i withdraw my PF now TDS will deduct or not.or if i withdraw my pf after july 2016 than also TDS will applicable. pls suggest me so that i can withraw my pf amount as early as possible.
Sir,
I have worked in company for 2years after that i have resigned and i have applied pf withdraw on march 2015. I got pf amount 30149/- only .
But as per employee and employer 780+780 deducted for 22 months.and 2 months 1210+1210 deducted as per new pf circular.
So i suppose to get 39000/- But i got 30149/-
I want clarity at wt type of deductions done.
SIVAKUMAR
i have worked with company for four years, but now i want to withdraw PF, is some tax will be deducted?
Hi,
I worked at a company for 3 years (2008-2011) and then changed. I withdrew my PF in 2014 December which was 6 years after the PF account was created. Does this attract income tax? And how much do I have to pay as tax?
Regards,
Anju
Sir
i worked in a PSU for 4 years and seven months . . Now i changed my job and joined in Government Service where there is GPF . i am planning to close my EPF account since there is no provision to transfer the amount to GPF . If i close my EPF account after 5 years , is the amount taxable ?.
I worked with an organization march 2011 to Nov 2013.since i have not withdraw my PF and its almost 4 years 4 months. if i withdraw my PF now TDS will deduct or not.or i i withdraw my pf after march 2016 than also TDS will applicable.
pls need your sugggstion
i worked my last company 2006-2007
i not still not withrow pf amount
but one year befor when when i apply for pf they i not get it
at pf site when i check it its status not showing.
what shoud i do.
Dear Sir,
I have worked in a company for 17 years and resigned in the year 2006.Now, I am getting some pension from my old PF Account.
After a gap of 4 years, I have again joined my old company with a new PF Account Number and worked for 4 years and 3 months (Less than 5 years) and resigned.
Please clarify whether now I can claim the full balance standing in my new PF Account without any connection with pension I am getting from my Old PF account.
Please reply immediately with case laws in this regard if any since the matter is VERY VERY URGENT.
Hope you wil do the needful.
Thanks with regards
SHRIVATHSA
Sir,
If I left my service after completion of 4 Year of service and I withdraw my PF after 1.5 Year of left service (total Period from joining the service to Withdrawal of PF is 5.5Years)in this case the PF will be Taxable or Tax Free.
Please clarify me.
Thanks
Dear all,
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We will provide solutions as soon as possible.
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Excel Consultants Team !
Hi
I have a question?
I am working for an x company and after 9 months i was on bench(loss of pay). after 1 year i am changing company(got job). does this lop has any effect on my PF as well as my experience letter. could you clarify this?
I work for a company for 26 months and then moved to a new employer who happen to be Wipro. I came to know that Wipro EPF is not maintained by Government EPF organization, instead it is operated by their own trust. Also, I came to know that transfers from Government EPF to Wipro EPF would be painful and has to go through lots of delays and document obligations. Is this true? Is withdrawal is the best option for me?
I have a quick Qs.
1. Is adhar number needed for any PF withdrawals?
2. I have to withdraw PF’s from my previous employers whom I have left in 2005-2008, 2008-2010 & 2010-2013. Can you help me relaying the correct procedure please.
Best regards,
SK
Hi,
Please help me with this query.I was working with a company for three years and ten months.Now I have filed a request to withdraw my PF.Can you plae explain how much of tax will be deducted and from where I will get details about the amount deducted.
Dear Anjali,
Tell your company HR to attach correction in name letter on company letter head and mention the names in the company record,Pf record and bank record and correction in name should be as per your bank records.
Hi,
I was working with a company 3 years 3 months & then i left the company. i filled the form to withrawal my PF .since from 1 yrs i didn’t received my pf. & contentiously getting the same online status.
STATUS for Member ID: KRKCH00218900000000434
Claim ID : KRKCH150200012893
Status : Claim Form 10C for Withdrawal Benefit AGAINST Member Account No (KRKCH00218900000000434) has been rejected. Rejection letter is under dispatch/ dispatched to address in your claim.
Claim ID : KRKCH150200012900
Status : Claim Form 19 for PF Settlement AGAINST Member Account No (KRKCH00218900000000434) has been rejected. Rejection letter is under dispatch/ dispatched to address in your claim form.
Reason of rejection: The reason of rejection is not available in database. You may please contact RO/SRO KOCHI for further details
* * Data available since last six months. * *
* * KOCHI data availaible from 11-11-2014. Last updated on 11-05-2015 at 08:31 am * *
* * Approval Details on PPO and Scheme Certificates will be made available soon.. * *
i spoke with my company HR and she asked me to send my 10th markehseet , as she has made mistake on my name and thats the reason its got rejected. i have already sent one months back. could you help me to understand when i will received my Pf. please help me
Thank you
Anjali
Hi,
Can any one help me to understand this below transaction online PF transfer status.
And how much time it still take to transfer this transfer amount.
I got the message from EPFO on 03/09/2014 saying that:-
“Member ID: DSNHP00174920000006780-112 PF Claim ID: NHP140750001400 Settled Amount: Rs XXXXX.00 Sent to A/c No.: 30100649549 (IFSC Code SBIN0001122)-EPFO”
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Sr No Member Name Previous Account No. Current Account Status of Claim Employer Printable Form 13
1 BHIUTRAS MEHER DSNHP00174920000006780 WBCAL00403940000000600 02 July 2014 Claim Form Submitted .
17 July 2014 Claim Form Approved by Previous Employer .
Current Status :Your request is In Transit between EPFO Out and In Office. Details
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When it will be credited to my PF account.
Thanks in advance.
i have resigned by job in January and iam expecting my settlement
whether I will get both my pf and epf settlement, if yes when I will get the same
Hi,
It is almost 3 years and 6 months Since I left my exempolyer now I want to withdrow my PF amount.
Kindly suggest how can I proceed?
Kind regards,
Brajesh
Hi, I have completed 5years as PF member(with two organizations), but due to some reason the PF from my first organization was not transferred to my second organization and when I withdrew the PF from my First organization tax has been deducted, can you please suggest how can I claim it!
I have completed nearly 4 years in a foundation. Now I want to withdraw Pf. is it possible? how much of Pf i can wirthdraw?
I have completed my 60 years on 16th Arpil of this year. Employer wants me to contiune for few months. I have completed only 4 years and I dont think I will be able to contiune for one more year due to personal committments plus due to health condition. Unfortunately cluse 41 of the finance bill wants the trustee of PF to deduct TDS if 5 years are not completed plus the specific case DOES NOT FALL UNDER RULE 8A OF SCHEDULE IVA. Rule 8 A exempts if the discountenance, is due to circumstances beyond the control of employee. Retirement due to completion of 60 years will tantamount to circumstances beyond the control of the employee and exempt under Rule 8A?
Note On Relevant Clauses of Finance Bill 2015
Clause 41 of the Bill seeks to insert a new section 192A in the Income-tax Act relating to payment of accumulated balance due to an employee.
It is proposed to insert a new section 192A so as to provide that notwithstanding anything contained in any other provisions of this Act, the trustees of the Employees’ Provident Fund Scheme, 1952 framed under section 5 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, or any person authorised under the scheme to make payment of accumulated balance due to employees, shall, in a case where the accumulated balance due to an employee participating in a recognised provident fund is includible in his total income owing to the provisions of rule 8 of Part A of the Fourth Schedule not being applicable, at the time of payment of accumulated balance due to the employee, deduct income-tax thereon at the rate of ten per cent.
It is further proposed to provide that no deduction under the aforesaid section shall be made where the amount of such payment or, as the case may be, the aggregate amount of such payment to the payee is less than thirty thousand rupees.
It is further proposed to provide that any person entitled to receive any amount on which tax is deductible under this section shall furnish his Permanent Account Number to the person responsible for deducting such tax, failing which tax shall be deducted at the maximum marginal rate.
This amendment will take effect from 1st June, 2015.
Clause 49 of the Bill seeks to amend section 197A of the Income-tax Act relating to no deduction to be made in certain cases.
The existing provisions contained in sub-sections (1A) and (1C) of the aforesaid section provide that no deduction of tax shall be made under the sections referred to in the said sub-sections in the case of a person specified therein, if such person furnishesto the persons responsible for paying any income of the nature referred to in specified sections, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner to the effect that the tax on his estimated total income of the previous year in which such income is to be included in computing his total income will be nil.
It is proposed to amend the sub-section (1A) and sub-section (1C) of the said section so as to give the reference of section 192A and section 194DA also in the said sub-sections.
These amendments will take effect from 1st June, 2015.
Exclusion from total income of accumulated balance
8. The accumulated balance due and becoming payable to an employee participating in a recognised provident fund shall be excluded from the computation of his total income—
(i) if he has rendered continuous service with his employer for a period of five years or more, or
(ii) if, though he has not rendered such continuous service,
the service has been terminated by reason of the employee’s ill-health, or by the contraction or discontinuance of the employer’s business or other cause beyond the control of the employee.
Retirement is supposed to come under the head “other cause beyond the control of employee”