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In most cases, the accumulated PF balance is withdrawn at the time of retirement, and therefore, not taxable in the hands of the individual.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 Only under the circumstances listed below will the amount withdrawn from PF be eligible for such exemption from tax.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In short, where the PF amount is withdrawn before five years of continuous service, it may be taxable in the hands of the individual as if the fund was not recognised from the start of the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.
Image courtesy of Mister GC at FreeDigitalPhotos.net
I have withdrawn my PF and pension fund during FY 16-17 and my PF account was 4.5 yrs old.
I understand that employer contribution and interest accrual on employees and employer contribution are taxable.
Also Employee contribution if computed during any tax year under 80C will have to be revised filed. in my case, I just included for 1 yr.
My questions are:
1. Do I need to file revise return for all preceding tax years by adjusting the income or can I show PF withdrawal money and interest as earnings in FY16-17?
2. Is pension fund money taxable too?
Thanks,
Nilotpal
I WORKED IN A COMPANY FOR MORE THAN 5 YEARS WITH CONTRIBUTION TO EPF BOTH BY THE COMPANY AND SELF.
NOW I AM 63 YEARS OLD AND RETIRED. I HAVE RECENTLY APPLIED FOR WITHDRAWL AND RECEIVED MY CLAIM.
IS AMOUNT RECEIVED BY ME TAXABLE?? WHEN I SUBMIT MY IT RETURNS AM I TO DECLARE THE AMOUNT SO RECEIVED AND IF IT IS EXEMPTED FROM TAXABLE INCOME, UNDER WHAT SECTION IT IS EXEMPTED. PLEASE CLARIFY.
REGARDS
hi sir I am working in corporate company for four I need to take my PF due to my personal reasons. In net I found form 31 should be submitted my question is in that they are asking reason.. whether they will enquire on that. one more question whether I need to take sign from my company even I am taking my contribution only.
Dear Sir,
I am going to change my current job, I have completed 10 months in my current job with employer ‘A’ and worked for 3 yrs in previous job with employer ‘B’. While leaving previous job with employer B I had transfer accumulated PF to employer A so the total vintage of PF is 3 yrs & 10 month.
As per my current employer’s policy I have to either withdraw or transfer my PF from company while leaving job and as per my new employer’s policy I will not have PF a/c there (they will paid me everything in monthly salary) so I do not have option to transfer the accumulated PF to new employer. Also I do not want to withdraw PF as it will attract Tax since the vintage of fund is less than 5yrs.
In above situation please suggest a way out to save income tax on accumulated PF ( On one side I don’t have choice to transfer PF to new employer as I will not have PF a/c there and other side I have to withdraw PF from current employer as I am leaving company).
Awaiting your reply. Thanks?
My service was terminated by my ex employer without proper reason. The ceo just asked me to put the papers. I worked for 1 year 9 months with them. Now when I want to remove my epf accumulated the HR and Admin head is telling me that i will have to pay tds on the amount of epf. As per your note above, it seems that tds is exempeted for my case. Is it possible for you to share the income tax clause with me or the Income tax circular for same. This would be a great help for me, as im in a financial crisis right now.
Sir I have completed 16 years service in private company. And I got VRS ,I want to close my PF account completely. There is TDS for that amount? 1 .15 lakes balance. Please reply me urgently required.
I have worked in a partnership firm for 2.5 yrs as employee. After that last year they have made me partner in their firm due to which contribution towards EPF has stopped and I have withdrawn my EPF this year. Will this EPF amount be taxable or will it come under the condition of reasons beyond control of employee
Sir, A peron worked in a company from 2006 and left in 2015. He withdrew PF accumulated balance of Rs.500,000/-.in the year 2015-16. Whether he has to pay incometax for the contribution 2011-12, 12-13,13-14 and 14-15 he withdrew
Sir I worked in a company for 4 years and withdrew my PF after 5 years of membership. When i received my PF they had deducted 18000 Rs. Now I am jobless and not doing any job for continuous 1 year. Is there any way that i can get my 18000 back through ITR or something?
I moved to SINGAPORE from India for good. IN 2013 , I have withdrawn my PF amount which is around Rs. 431366 INR in Financial Year 2015-16. But I got amoutn after deducting TDS @ 10% to my bank account. Can I claim refund of TDS in full amount ? if yes under what section ?
Hello sir,
I left a job after 4 years and joined other. I requested for the pf withdrawal and i got my pf after 10% deduction of the same. For the current assessment year my salary income slab lies in 10% slab rate excluding pf withdrawn.
Please guide me the correct way to file itr. Am i eligible of getting back part of my tds deducted after the deduction of correct tax amount out of it?
I AM thankful to you for pf withdral details explained.can I ask that under what section of IT ACT , we can claim that employees share of pf to the extent not claimed earlier IS EXEMPT.This is required to refer in my it calculation which involves PF WITHDRAL befor five years.
kindly guide me soon as i have to file it return now.
amount received on maturity of Employee PF is taxable or exempt for senior citizen?
I moved to USA from India for good. After 2 years, I have withdrawn my PF amount which is around 1.5 Lakh INR. But I have been levied around 20000 INR as tax and I got only 1.3 Lakh in to my bank account. Can I claim this 20000 INR in tax filing?
I withdraw my PF in 2015 and Tax was cut as per my past tax slab of 10% but now when i try to fill ITR that time its showing that i need to pay 20% considering my current tax slab
Do we have a answer was this question? I am having the same doubt. How do I recover the TDS on my EPF withdrawal? As my taxable income is less than minimum slab.
Hi,
Ihave worked in one organisation for 4 years, 10 month and 12 days (only 1 month 18 days less for completing 5 years), I had switched organization in Feb 2016,
if i am withdrawing the PF after may 2016 whether it is taxable or not?
I have completed 23 years of continues service in a private company. Now leaving the organisation and going to do my own business. Whether withdrawal from P F attract tax in coming years ? where I can deposit the amount to exempt from Income Tax ? kindly help me
I left my first company after 4years 10 months, 2nd employment is for 1 year 7months and my present employment is 4years 6 months. I have resigned the job and going overseas… Is there any tax if I withdraw the PF?
I have completed 9 years in organisation I can withdra the pf its taxable and what will interest they will give me?
My employer was maintaining PF fund corpus, I left job after 4 years due to my husband’s overseas posting. Though I could have joined another organization, had I been in India, but due to my leaving the country and the employers refusal to keep the fund uptill five years my employer has deducted the tax. Is it legal on employer’s part?
My father in law is retired from LIC Of India on 31-01-2011 , in 2014 LIC had given contractual agreement.which was going to terminate after two years of joining or completion of 65 years of age whichever is earlier. His service is terminated after completion of 65 years of age.that is after 22 months from joining. His resumption date is 20-01-2014 and his termination date is 11-01-2016. My point is whether income tax is deductable from his P.F. contribution with interest or LIC P.F. contribution with intetest or not.
There is an online petition going against the unjustified
EPF withdrawal rule. Please sign and share the below petition. In fact I
have tweeted Srikanth Reddy also to share the petition details in his
blog.
Sign it at change dot org why should we wait till 58 years to withdraw Employee Provident Fund
Withdrawal from Provident Fund (PF) Account before Completion of 58 years taxable?
I thought it mentions that:
“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.”
Also
“Only the contribution made by the employee is the part which is taxable (which implies that the contribution from the organisations end would not –> this simply means that half of the total PF withdrawal amount would be taxable)”
So that makes me clear of doubts like:
Do I get taxed on my PF amount if I serve the Organisation for 5 and a half year and then request the termination of my PF A/C? => NO
What if I only serve for 4 years and 11 months? => YES (Dude of course! It’s called MATH)
What about 1 year? => YES (BIG surprise)
After I retire? => YES (Er.., do you want additional handling?! It’s pretty simple: if your service was more than 5 years and then you decide to retire, NO TAX DEAR!)
However, there certainly are some things which are not yet so clear.., er.., like..,
*Dude why on Earth is the “”PF”” amount TAXABLE?!! (first-of-all)
*Is it not enough that you’ve increased the TAX amount already so high (on ‘everything’)??
*{{post your question here}}…
hi, i have worked in a private company for one year and left after now i am working in a company where i don’t have any epf facility. can i withdraw my one year pf amount from my previous company as per new rules?
see see accha din aagaya hain ab ki bar modi sarkar
60% of the intrest which i get post my retirement will definitely be a big value … am very unhappy with this decision ….
to evryone…only the interest portion is taxable @60%…also that interest will be tax emempted if amoutn invested in annuity pension scheme.
what is unclear at the moment is whether PF withdrawal on retirement is also taxed
Only the wealth accumulated post 2016 april 1st will be under these norms. They wont tax all the money accumulated untill that date. Thats what I understood from an article.
I had worked in an organization form July 2010 to August 2013. Then I have taken break for almost 2 yrs. I rejoined in another firm on 2015.
I have not withdrawn the PF from my previous company. If I withdraw PF now, will that be taxable?
Please reply.
Sir m working in hotel and its been more than 4 years and i will be completing 5yers by june this year i need to withdraw some amount from my pf account which is around 15000 only do i hve to pay tax on it as m not withdrawing the whole amount . Plz reply as i will wait for your precious reply . Thank you
Hi, I have worked in a private organization from from Oct, 2012 to May, 2015 and have taken break till January, 2016 and joined a new organization in January, 2016. Can I still transfer my pf account and will my pf amount can be tax exemptable still?
I had worked for a Central Govt. PSU for 1.5 years. Now I have switched to Central Government job where there is no PF since employees joining after 2004 are contributing in NPS. So I cant get it transferred here. Also, I have not completed 5 years of continuous service. Will I have to pay tax if I withdraw it or it may be exempt under the clause of reasons beyond the control of employees. Please reply.
Hi,
I have been emplyeed with an organisation from April 2011 now I have resigned and I will be relived by march 2016. In this case If I transfer the funds to PF account with new employer and withdraw it in May 2016 (Since 5 years completed with 1st employer). Will it be possible and not taxable on my part.
Hi,
I want to WITHDRAW my 8 Years PF amount as I am unemployed from 2 months.
If I raise withdraw request, then will I get 100% of PF amount OR only 75% now and 25% later after 58 year???
News as on July 2015: Government plans to cap premature withdrawal of PF money at 75% of total amount
Is the above rule is in implementation??
On withdraw request, Now will we get 100% of PF amount or only 75%???
Thanks
Hussain
Chennai
Dear Sir,
I am doing job since 2.6 yrs in this company but i need money so i will withdraw my PF balance or not??
Please guide me…
Br,
Nailesh
Sir,
Our company maintained PF in trust since inception (2006-2011 June). From July 2011 the amount was transferred to EPFO and thereafter It got deposited with EPFO only.
I have completed 9 yrs service in the same company and still continuing. Now I want to withdraw amount from EPFO for purchasing of house (based on the rule that I have completed 5 yrs of continued service). When enquired in EPFO by personally visiting the officer, he said I can apply as I have completed 5 yrs.
But my company HR gave an info that we can withdraw only after 5 yrs of completion from the month of transfer to the EPFO , i.e – from July 2011 – July 2016.
The EPFO officer who is so much experienced also didn’t say about this when we told him that it was earlier under trust and now with EPFO
Is this true? Pls guide with the facts.
U can drop your reply to my email pkbalaji@gmail.com
Thanks in advance
Hi,
I completed my service at a firm in India on Sep 1st 2015, after completing almost 4.5 years of service. I complete 5 years in Apr 2016.
I have now moved outside the country and gainfully employed.
Should I wait to complete 5 years ie make a claim on the PF post April 2016 to avoid taxation?
No additional employer contribution will be made in India, however I would have completed 5 yrs of money with PF accounts.
Kindly advise
Cheers
Hi,
i have worked in one organisation for 4 years, 11 month and 20 days (only 10 days less for completing 5 years)
if i am withdrawing the PF whether it is taxable or not?
If taxable how much taxable ?
jitendra
Dear Sir,
I have worked in one org for 5yrs and 3 months and after one year i have transferred to other organization, Can i now withdraw for purchasing a plot or construction purpose.
Kindly advise..
Regards
Is it same for coal mines provident fund? if some has withdrawan coal mines provident fund before five years and has resigned?
Whether GPF contribution made by Government employees is eligible for deduction while calculating Income tax? If yes, whether any terms and conditions are there?
I left the job in Aug 16th 2015 and it will be 5 years in Nov 15th .can I wait till 15th Nov and withdraw my EPF amount so that it will be tax free.Please advice.
Thanks,
Rekha
09971187540
Sir,
I am working in a institution above 33 years. My query is if i am withdraw rupees three lakhs from my PF account whether it is taxable or not?
Regards,
I have company PF and SA accumulated for about 12years with the company in india and then I was transferred abroad and become localized employee of the company with local salary. I am not contributing nor employee is contributing. My PF and SA is still in company’s PF. Since I am NRI with no income in India, I am not filing any tax return in India. If I withdraw PF and SA in India will I have to file tax return in India. My company confirmed that they will not do any TDS.
I resigned my job on 2014 nov. from previous company (total service is 4.5 years only).
In my PF, ECPF, and VPF (voluntary provident fund)all accoumulated around 7 Lakhs (i saved more money in vpf).
Now i approached for PF final settlement to my previous company. but they asking form 15G. upto 2015 march, i paid tax for the account transaction from (April 2014 to 2015 march
Two month back i joined in abroad. so as a NRI holder cannot get form 15G.
In my case how much tax they will detect, Detection will be on full final settlement amount or only in interest? or only in PF and ECPF?
IS there tax detectionj on VPF amount also?
That final whole detected tax amount can i refund from IT department? how much % in tax for 7Lakhs?
I’m a school teacher in a govt aided school in West Bengal. I joined my job on 23.08.11. But my head of the institution started my GPF from March of 2013. Due to his ignorance, he insisted that it should be started in the new financial year 2013 not in September 2012. What kind problems may occur due to this and how can this be resolved.Please help.
Is PF withdrawal double table.
I have served in X company from Aug2010 to Mar2014, and then while moving to the new company I have opted for PF withdrawal. Then I joined new company April 2015.
I have got the PF settlement from my previous company tax deducted as below in August 2015
Income tax payable for FY 2009 – 2010 —————> 0
Income tax payable for FY 2010 – 2011 —————> 3892.00
Income tax payable for FY 2011 – 2012 —————> 5678.00
Income tax payable for FY 2012 – 2013 —————> 6405.00
Income tax payable for FY 2013 – 2014 —————> 7296.00
Total————-> 23271.00
And now when I am filing my IT returns for FY 2014 – 2015, Should I again add the PF settlement to my current Taxable salary? If so I will be paying income tax for same money 2 times. Point to be noted here is the Tax has been already deducted for PF settlement amount.
Some of the people suggested that I have to include the complete PF settlement amount and pay the tax with respect to tax slab.
In my earlier company I was in 10%(2.5 to 5lakhs) slab
Now I am in 20%(5 to 10lakhs) slab, so adding my PF settlement amount is taking me into 30% slab, and the tax payable is coming to 63,000.
If this is true then the below is the my statement reg it.
I have withdrawn PF settlement of 262324, and tax payed by previous employer is 23271 and got a cheque of 239053, not I include it my IT returns it says I have to pay 63000 more tax.
So on withdrawal of 262324, I am going to pay 23271 + 63000 = 86271.
More than 30%.
Can anyone solve this?