Tax On Provident Fund Withdrawal - Pf Account
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Tax On Provident Fund Withdrawal - Pf Account

SrinivasMani Started The Discussion:

Hi,

I have changed job and therefore withdrew my PF from my earlier company. The amount was around Rs. 20000 to 24000/- max. A tax was deducted on the same.

Is it allowed ? My salary was in the range of Rs 350000/- p.a. there.

Can I claim it as refund from the Income Tax.

Would like to have your response on the same.



Thanks Regards
Srinivas Mani
9833418230

chitra.sharma - Member Since: Nov 2007
Hi! Srinivas As per my knowledge no tax should be deducted from PF amount withdrawn. But if it deducted in your full & final deduction then you can claim form the IT dept. Chitra Sharma

Rashmi P - Member Since: Nov 2007
Hi Srinivas,

If the same PF account exists for 4 year and above, and later if you withdraw the same, then the PF amount is not taxable. if you are withdrawing the PF amount before 4 years, then its taxable based on your annual taxable income.

Regards
Rashmi

atul_kudhuliya - Member Since: Nov 2007
this may help you

Kinds of PF and its tax treatment:
There are 3 types of PF schemes provided by the employer, namely Statutory PF, Recognised PF and Unrecognised PF.
However, an employee may also contribute to the Public Provident Fund scheme.

Statutory PF:
This fund set up under Provident Fund Act, 1925 is mainly meant for Govt and semi Govt employees, university/educational institutions etc.
Taxability:
Employee’s contribution: eligible for rebate u/s 88.
Employer’s contribution: Fully exempt from tax.
Interest on PF: fully exempt from tax
Repayment: fully exempt from tax u/s10 (11)

Recognised PF:
It is a scheme to which the Employee’s Provident Funds and Miscellaneous Provisions
Act, 1952 applies. According to this Act, any establishment, which employs 20 or more persons, is obligated to register under the Act and start a PF scheme for the employees in the organisation. Such scheme has to be approved by the Provident Fund Commissioner as well as the Commissioner of the Income Tax.

Taxability:
Employee’s contribution: rebate u/s 88 is available
Employer’s contribution: exempt up to 12% of salary, excess of 12% to be included in gross salary.
Interest on PF: exempt u/s 10 up to 9.5% p.a Interest credited in excess of 9.5% to be included in gross salary.
Repayment: exempt in the following cases:
  1. In the case of an employee who has rendered continuous service with his employer for a period of 5 years or more, or
  2. In the case of an employee whose service has been terminated by reason of ill health of the employee or due to the discontinuance of the employer’s business or other cause beyond the control of the employee.
  3. In the case of an employee who obtains employment with another employer who maintains any RPF to which the accumulated balance becoming due and payable is transferred.
In all other cases, where repayment is made, an employee will be liable to be taxed on the earlier exempted amount. Even the employer contribution and interest accumulated on the entire amount shall be taxed to income under the respective heads of income.

Unrecognised PF:
A scheme started by an employer not approved by the Commissioner of Income Tax is called as an URPF.
Taxability:
Employee’s contribution: No rebate u/s 88 is available.
Employer’s contribution: not taxable at the time of contribution
Interest on employer’s contribution: not taxable at the time of credit
Repayment: Accumulated employee’s contribution is not taxable
Interest on employee’s contribution till date is taxable as income from
Other sources.
Employer’s contribution+ interest on such contribution
is taxable as profit in lieu of salary.

An employee in a government sector need not bother about the PF scheme as in all cases it is a statutory PF and hence exempt from tax. Where as an employee and an employer of a private sector concern have to ensure that their PF scheme is approved by the concerned Income Tax Official to get the eligible exemptions. Needless to say that a recognised PF scheme is the most common and immediate investment that strikes the mind of a middle class salaried person.
Regards
atul

SrinivasMani - Member Since: Mar 2008
Hi,

Thank you all for the reply.

I was in the said company for 9 months. I had left the job in 9 months. The PF amount was around 24600. Even then the tax has been deducted of Rs. 7600/-. Further, the PF was governed by the trust of the employer. Can the tax be deducted ?

Further,before this company, I had worked in a company for 5 years and here the PF was governed by Statutory PF. The amount came to around a lac towards PF and around Rs. 20000 toward pension. Here also the tax was cut. Can it be done ?

Request you to reply for both the queries.

Regards
Srinivas Mani
09833418230

SrinivasMani - Member Since: Mar 2008
Hi, Would request you to reply to the revised query on the same. Thanks & Regards Srinivas Mani

C.Gopal - Member Since: Jan 2008
Dear All,

I have joined in Public Limited company on Dec 2007 based on my Diploma qualifications (12 yrs experience ) and now just finished my Graduation in Engineering.

Cud u pls suggest/advice me if any financial benifits are applicable for me based on my graduataion, if it is there how much can i expect.

I request your urgent reply.

Thnaks a lot

CG

sivakalyan - Member Since: Aug 2010
Rashmi,

when you say 4 years is that should be an active PF account.

i have worked in one company for 2 years from 2007 to 2009.
still i haven't withbdrawl the PF amount
it has been more than 3 years now.
if i withdraw after 4 years will that tax get deducted or not

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