TDS On Provident Fund - CiteHR
Sibabrata.majumdar
Management Consultants Legal & Hr
AK CHANDOK
Epf & Esi Matters
Pramodthakar
Taxation And Hr
RAMAKANT R
Primus Techsystem
Roopeshtek
Software Engineer
+1 Other

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Hi
Request experts to put light on TDS on settlement of PF after resigning from an organisation.
I am working with a company, where they had their own Employee PF Trust which is different than state run Employee Provident funds and they do, deductions of EPF as well as VPF and allow interest as per the rates decided by govt. Recently, one of my colleague left the organisation and during his full & Final settlements, he received proceedings of PF after TDS.
As far as we know any proceedings received from Life Insurance & provident funds are free from Income tax..
Request for kind guidance on the subject matter and the rulings over this
Thanks in advance to all

If you withdraw the PF before completing 5 years of service, the amount of PF is liable to TDS.
If you withdraw the PF before completing 5 years of service, the amount of PF is liable to TDS. Please check the period of employment of your friend with the Company.
Pl. note, if EPF withdrawn before 5 years, then the proceeds are taxable. Hence TDS is deducted by your co. In other case, when proceeds received from EPF govt. department, the member is required to add this as a Income in his I.Tax return and pay the taxes thereon.
In my view, the amount received as a settlement of PF account is not Taxable .However, interest earned on it after the receipt is taxable.
I will suggest for taking up this matter before the RPFC who has granted the Exemption to the Trust of the covered estt.
A K Chandok
RPFC ( Retd.)
www.akchandok.com

Dear Friend,
An employee who was covered under PF Act, served the company less than 5 years.The question is as to whether he will receive his PF contribution including interest earned thereon for the period he worked with the company without TDS. There are three components involved i.e , employee contribution , employer contribution and interest earned during the period in question.
In am of the opinion that PF amount to be received will not be taxable but the interest earned on the same is subject to tax.
Sibabrata Majumdar
Management Consultant Legal & HR

Dear Members,

Please see the link Withdrawal from Provident Fund before Completion of 5 years taxable?

The withdrawal amount is taxable in case the amount withdrawn before completion of 5 years.

The second logic of the same is when the PF is deducted obviously one must have deduction U.S. 80 C of I.T. Act. If it is withdrawn before 5 years then it does not become long term deposit. The rebates in IT is only for Long Term Deposit. In PPF the locking time is 7 years and if the money is withdrawn it becomes taxable.

In other words in the year when the money is withdrawn in the f.y. the amount will be shows as his income i.e. when his tax calculation takes place will be

Salary Income + amount withdrawn from PF. If the total sum is falling under tax bracket then he has to pay the tax as per rules.

In case I worked with one company for 5 years. In the 6th year I am unemployed my income is "0" in this I withdrawn the amount from PF Rs.1,00,000 this will be total income will qualify for tax but Rs.1,00,000 is free hence I do not have to pay tax.

The method of payment either by TDS (by your employer) or by self Assessment Tax also.

Ramakant

Hello
I have completed my first company service. It was about 4 years 11 months and 15 days. But now 5 years is completed after my resignation. So am I liable for TDS deduction if I withdraw my PF now??

if A working in XYZ company- he was left the job on 31st January 2011 and not working in any other establishment after this date.
1.If he will go for withdrawl his pf now what will be the condition of his T.D.S.
2.If he will be go for withdrawl his pf on 1st february 2016 ( after 5 years) what will be the condition of his T.D.S.

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