Is Your PF Withdrawal Taxable After Resigning? Seeking Clarity on Regional vs. In-house Trusts

Hi,

Please help answer the following questions:

Will PF withdrawal from Regional Provident Fund or In-house Trust be taxable to resigned or left employees?

Waiting for your suggestions and replies.

Bliss

PF is a retirement benefit. So in case of resignation, it should be transferred to the Trust/RPFC of the next employer. PF can be withdrawn tax-free in cases of resignations if the employee is leaving the country for good and produces proof thereof or starts their own business. The PF is tax-free if withdrawn at the time of retirement. In case it is kept with the trust even after retirement, then all the earnings after that date are technically taxable. Since the subject is sensitive, you should have a clear-cut guideline from a good tax consultant before taking any action.

Best Regards

PF withdrawal is not taxable from Trust/RPFC in any circumstances. If you leave the company and want to withdraw your PF and Pension, you need to fill up Form 19 & Form 10C (only after 60 days of your leaving the company). Alternatively, if you want to transfer the same to the new company, in that case, you need to get Form 13 (revised) filled up from your new employer, and the same is to be sent to your previous employer. These forms are available on "www.epfindia.nic.in".

Warm Regards, Praveen Sharma 098-1000-6022

Thanks for the prompt reply but I am still confused with the different replies. Can income tax authorities place tax liabilities on PF withdrawal income? As of now, there are no clear guidelines regarding such income.

Regards,
Bilss

Dear all,

Please note that EPF in RPFC does not deduct any tax at source while reimbursing the PF money. However, if you withdraw money before the 5-year duration, it is a taxable amount, and you need to show the same when you file your yearly return.

In case the money is with your company trust, they would deduct tax and reimburse the money. The tax would be the same as the reversal of the benefit taken by you during the financial year.

Money withdrawal before 5 years is taxable, and the amount needs to be shown in your return.

Regards,
Gagan

Hi Gagan,

I agreed on clarification. Some people withdraw their PF money frequently and even do not show it in the annual tax return.

Bliss

Hi Bliss,

Thanks for bringing up this topic as I, too, need some clarification on the same.

Gagan, you have given a clear-cut clarification on this. Thank you for that. However, I am not sure how important it is to declare this during IT filing, and in case it is not done, what could be done later. Please shed some light on this.

Regards,
Ray

Simple buddy, this becomes your black money then... because small cases don't appear in scrutiny by the IT department as they are more interested in big fishes. Hence, normally, you get scot-free. So don't worry, enjoy life. It's your black money now or try to invest this money in PPF in the bank.

Gagan,

Appreciate your input. Very few people actually know that PF withdrawal before 5 years is taxable.

Meraj

Gagan is right. If you have resigned recently and withdrawn your PF, then wait until June-end next year. The company shall be mailing the TDS certificate too. This happened with me too when I was there in HCL; they have an in-house PF scheme.

Surya

I would like to get one more clarity on the subject. Is the tax treatment different if PF money is with a trust compared to when PF money is with EPFO/RPFC?

My HR is suggesting that I should withdraw money from my previous employer (2.5 years in service) instead of transferring it to my new company. It will not be taxable since my previous employer has kept PF money with EPFO/RPFC. Is this correct?