Navigating Tax Deductions and PF Options in Your Full and Final Settlement

Hi all, I have resigned from a company recently, and because of company policy, I will receive my October month salary in full and final settlement.

Tax Implications of Full and Final Settlement

1) Till now, my salary has not fallen in the tax bracket. But if I include the October month salary, then it comes into the tax bracket. So, my question is: will the employer give me the full and final settlement amount after deducting tax or not?

Provident Fund Withdrawal or Transfer

2) Can I withdraw my PF, or is transfer the only option? If I withdraw PF, is that amount taxable or not?

Any help will be highly appreciated.

Tax Deduction on Full and Final Settlement

Logically, if the salary including October is taxable, the employer should have been deducting tax right from April. It is a requirement that TDS on salary be deducted equally every month. Otherwise, you are supposed to pay advance tax. The company will definitely have to deduct it from your full and final settlement.

PF Withdrawal or Transfer

If you are joining another company that already has a PF facility (that is, they have more than 19 employees and therefore need to be registered under PF), then you do not have the option of withdrawing the PF amount.