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.
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.
This fund set up under Provident Fund Act, 1925 is mainly meant for Govt and semi Govt employees, university/educational institutions etc.
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)
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.
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:
- In the case of an employee who has rendered continuous service with his employer for a period of 5 years or more, or
- 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.
- 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.
A scheme started by an employer not approved by the Commissioner of Income Tax is called as an URPF.
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
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.
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.
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