P Ramachandran
Hr & Administrative Manager
Generalist Hr, Personal Interest Towards
Labour Laws And Financial Matters
Pf & Esi
+4 Others

Hi! I worked with a company for 4 years and 10 months and left in July 2009. Now I am with another company. My erstwhile company had its own PF Trust. If I wish to withdraw my EPF and EPS, will it be taxable now?

From India, Mumbai
Dear Naveen,
If you withdraw PF before 5 years liable for 30 % tax deduction. So suggestable is to get that transfered or let that be in the same trust and withdraw after one year you will get interest paid on that also.

From India, Mumbai
Dear Varun, Its already 5 years, my new company does not have PF Trust. Will it be taxable if I withdraw from my previous company? and is it possible to withdraw EPF and EPS both? Regards,
From India, Mumbai
Yes you can withdraw your EPF and EPS both, without getting taxed now. If you want to get it transferred, you can do so, if your present company doesn't have PF trust then their PF account must be with PF Department (Govt.), still you can get it transferred there by submitting Form-13 to your present employer.
From India, Rohtak
Thanks Varun for the information.
But I just spoke to HR exec of my previous company. He told me that same will be taxable! can you please help me by providing the clause or ruling for the same? I need to withdraw my PF on urgent basis.

From India, Mumbai
Dear Naveen,
I think it is tax free, becouse Provident fund are totaly tax free u/s 80C.
obviously, you can transfer your EPF & EPS both amount to your new account which is alloted by your current company. If your current company does not have the pf trust so your previous campany has to transfer your amount to the RPFC office of your current company.

From India, Calcutta
The 5 years criteria for Taxation on PF is explained below:

This comes under consideration only for Recognized Provident funds like Trusts and only in certain cases.

Recognized provident fund (Trusts):

o The employer's contribution to such a provident fund in excess of 12 per cent of salary is taxable in the hands of the employee.

o Deduction under Sec 80 C available on employee contribution.

o The interest credited up to 9.5 per cent, exempt, in the hands of the employee. However, the excess is taxable in the year of contribution or credit of interest.

o At the time of withdrawal, the accumulated balance will not be taxable if the employee has rendered five years of continuous service. If the accumulated balance includes any sums transferred from another RPF account maintained by a former employer, then the period of service with that employer should also be reckoned for this purpose.

o Rule 8 of Part A of the Fourth Schedule of I T Act provides the circumstances under which the accumulated balance payable to an employee is exempt from tax . If employee fulfills any of following conditions, payment from recognized provident fund is tax free :

 If he has rendered continuous service with his employer for a period of five years or more, or

 If, though he has not rendered such continuous service, the service has been terminated by reason of the employees ill-health, or by the contraction or discontinuance of the employers business or other cause beyond the control of the employee, or

 If, on the cessation of his employment, the employee obtains employment with any other employer, to the extent the accumulated balance due and becoming payable to him is transferred to his individual account in any recognized provident fund maintained by such other employer.

o Explanation to Rule 8 provides that in case balance payable to an employee includes amounts related to fund maintained by former employers and transferred to new recognised fund from which payments are being maintained, continuous period of five years shall be counted by aggregating the numbers of years with other employers.

o Withdrawal from RPF , will be taxable if the employee has rendered less than five years of continuous service and HENCE tax treatment shall be as below in Unrecognized PF.

Unrecognized PF:

o Employer's Contribution - exempt.

o Deduction under Sec 80 C NOT avialable on employee contribution.

o Interest credited to provident fund – exempt

o Lump sum payment at time of retirement or termination of service –

 Employee's own Contribution : Exempt

 Interest on Employee's own Contribution - Taxable under the head "Income from Other Sources"

 Balance taxable under the head Salaries, meaning Employer's Contribution.

 Relief under section 89(1) as far as employee’s tax liability is concerned.

o So in nutshell, Yes, withdrawal of PF monies is taxable at the applicable tax rate if the concerned member doesn’t serve for a continuous period of 5 years, but subject to certain exceptions as below;

 From Statutory PF - fully exempt.

 From Recognised PF - exempt if the resignation happens due to ill-health or the voluntary business closure by employer

 From unrecognized PF - Own contribution exempt - interest on own contribution taxable - employer contribution and interest taxable

From India, New Delhi
Dear Vinicitehr & Ranjeet,
We have our own PF trust in our company and we are settling the PF withdraw cases from our provident fund trust, but we donít deduct any TDS or TAX from their settlement amount. We have so many cases where the employee rendered less than 5 years service but we donít deduct any tax amount from their settlement amount.

Please tell me whether it is duty of employer to deduct the tax from their settlement amount or it is duty of employee to deposit that amount to the government.

From India, Calcutta
I don't think the withdrawal of PF below 5 years is taxable even if it is from the PF department or a Trust duly recognized by the PFC under the provisions of EPF & MP Act, 1952. The entire amount is exempt under section 10(D) of the I T Act, 1961. So no question of deduction of TDS on PF withdrawals for the present. But in future if once the latest amemdments as suggested recently are approved by the Parliament then the PF withdrawal is taxable from the Assessment Year 2011-12 onwards.
From India, Hyderabad
Dear All,

I have one query, we have many employees in our company and some of them are more than 58 & 60 years, but they want to contribute in Provident Fund.

Please let me know whether they can contribute in PF & Pension or not.



From India, Calcutta

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