Is Your Provident Fund Withdrawal Taxable? Understanding Deductions and Rates

Dear Sir, I want to know if there is any provision to deduct income tax on the withdrawal of PF. Is the PF amount taxable? If yes, at what percentage? My previous employer has deducted Rs. 16,547 as income tax on my PF amount of Rs. 157,116, i.e., at 10.50%. Please make it clear to me as I am confused about that. Please revert back with correct information.

Normally, PF is retained by the Provident Office, not by the employer, unless an employer has approval from PF authorities for their own PF scheme/Trust. It is also withdrawn from the PF office. Employers simply deduct from employees' salary and deposit it through a challan. To the best of my knowledge, it is not taxable if withdrawn through the PF office.

Regards,
Baba Naresh

Double taxation is not applicable. What you deposit in terms of PF, the government uses it for infrastructure development. This is why insurance is also non-taxable. Your employer does not have any right to deduct tax on PF. PF is 100% exempt from tax as far as I know.

If you are withdrawing your PF, the withdrawal is not taxable only if a person has been in continuous service for 5 years; otherwise, it is taxable as per prevailing IT rules.

Dear Viloknandan,

Could you please highlight under which rule/section of PF it is taxable or applicable?

Regards,

Baba Naresh

Please guide me on tax-free salary components that would be beneficial for employees. Is the provident fund taxable or not?

Kalyani

TDS on EPF Withdrawals: Key Information

As per Section 192A, effective from 01/06/2015, if EPF is withdrawn before the 5-year mark, TDS shall be applicable at 10%. However, if the EPF amount is less than Rs. 30,000/-, then no TDS shall be deducted by EPFO. Employees may submit Form 15G/15H to EPFO, provided that the total income of the employee, including the EPF withdrawal amount, is not chargeable to tax. In such cases, no TDS shall be deducted.

Effective from 1/6/2016, the ceiling limit of Section 192A has been extended from Rs. 30,000 to Rs. 50,000. Therefore, employees can enjoy EPF withdrawals up to Rs. 50,000 without TDS deductions, even if the service period is less than 5 years.

Thanks & Regards,
V. Shakya
HR & Labour Law Advisor