I am trying to determine if the PF amount is taxable or not if I want to withdraw the whole amount after 1.5 years of working. For example, the monthly deduction is Rs. 780, and I have been working for 22 months.
So, 780*22=17160*2=34320+Interest (Just approximate). From the above equation, will I be able to get the whole Rs. 34,000+ (if I resign after 22 months) or will it come after tax deduction?
Please help me clear my doubt.
From India, Delhi
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So, 780*22=17160*2=34320+Interest (Just approximate). From the above equation, will I be able to get the whole Rs. 34,000+ (if I resign after 22 months) or will it come after tax deduction?
Please help me clear my doubt.
From India, Delhi
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PF contributions accumulated and withdrawn after any period of time is not taxable Regards Sebastian
From India, Bangalore
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1From India, Bangalore
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PF withdrawal is taxable if withdrawn before five years as per income tax act. Please get this clarified from A CHARTERED ACCOUNTANT. Paresh Shah.
From India, Mumbai
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From India, Mumbai
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P.F. withdrawal is tax exempted. You will get whole of your contribution andd only a part of employer’s contribution if the account is closed in less tthan 5 years. K.Viswanathan.
From India, Delhi
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From India, Delhi
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As per My poll results 90% says that PF is not taxable at any circumstances. What about the rest 10%?
From India, Delhi
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From India, Delhi
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Thank you so much, Shakti, I have applied as instructed, and they have provided me with my Account Number. Upon checking my balance, I noticed that the Employee Contribution shows as Amt. 2286 and the Employer contribution as Rs. 701, which, in my opinion, seems to be less. My monthly deduction was Rs. 450, and I worked there for 6.6 months. So, logically, the employee's contribution itself should amount to Rs. 2700 (450 * 6) + Employer Contribution + Interest. I would appreciate your assistance with this matter.
From India, Delhi
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From India, Delhi
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As mentioned earlier in the thread, PF withdrawals are not taxable ONLY if withdrawn after 5 years. My submission is that legal opinions with related conditions cannot be decided based on poll results of YES and NO.
From India, Mumbai
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From India, Mumbai
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First of all, it is taxable, and 90% of people are less informed.
Why is it Taxable?
When withdrawing from the exempted establishment, a percentage of it is deducted as TDS as per the Income Tax Act, and it is legal.
If your EPF is more than one lakh and you are withdrawing it, then you have to show it in your tax return, and it will be considered as savings. So, if EPF is greater than the saving limit as per the IT law, then it is taxable upon withdrawal.
Please correct me if I am wrong.
Stay cool, Atom
From India, Phagwara
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Why is it Taxable?
When withdrawing from the exempted establishment, a percentage of it is deducted as TDS as per the Income Tax Act, and it is legal.
If your EPF is more than one lakh and you are withdrawing it, then you have to show it in your tax return, and it will be considered as savings. So, if EPF is greater than the saving limit as per the IT law, then it is taxable upon withdrawal.
Please correct me if I am wrong.
Stay cool, Atom
From India, Phagwara
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Tax Exemption on Provident Fund (P.F.)
As per present law, P.F. deduction as well as payment with accrued interest is tax-exempt. The government was planning to make P.F. E.E.T. (exempt, exempt, and tax) under the proposed direct tax code, but this has been dropped due to stiff resistance from trade unions and other interested parties.
Up to 20% of contribution towards E.P.F. is tax-exempt. Similarly, up to Rs 100,000/contribution towards P.P.F. is tax-exempt. Repayment and accrued interest are also tax-exempt on these amounts. P.F. is also protected from attachments. Even employers/Government cannot adjust any dues from employees in his/her P.F.
Regards,
K. Viswanathan
From India, Delhi
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As per present law, P.F. deduction as well as payment with accrued interest is tax-exempt. The government was planning to make P.F. E.E.T. (exempt, exempt, and tax) under the proposed direct tax code, but this has been dropped due to stiff resistance from trade unions and other interested parties.
Up to 20% of contribution towards E.P.F. is tax-exempt. Similarly, up to Rs 100,000/contribution towards P.P.F. is tax-exempt. Repayment and accrued interest are also tax-exempt on these amounts. P.F. is also protected from attachments. Even employers/Government cannot adjust any dues from employees in his/her P.F.
Regards,
K. Viswanathan
From India, Delhi
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Taxability of PF Withdrawal
The withdrawal of the PF amount is taxable if it occurs before the expiry of five years, except in the following situations:
1. As a result of the ill health of the employee.
2. Due to the closure of the business by the employer.
3. For reasons beyond the control of the employee.
When an employee leaves one job and joins another, transferring the PF amount from the old account to the new one, the withdrawal is exempt from income tax. Additionally, the period with the old organization is counted towards the five-year deadline.
Fit yourself to the situation where you fall and consider the implications of income tax in your case.
With regards,
From India, Haora
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The withdrawal of the PF amount is taxable if it occurs before the expiry of five years, except in the following situations:
1. As a result of the ill health of the employee.
2. Due to the closure of the business by the employer.
3. For reasons beyond the control of the employee.
When an employee leaves one job and joins another, transferring the PF amount from the old account to the new one, the withdrawal is exempt from income tax. Additionally, the period with the old organization is counted towards the five-year deadline.
Fit yourself to the situation where you fall and consider the implications of income tax in your case.
With regards,
From India, Haora
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PF Withdrawal and Tax Exemption
PF withdrawn on account of resignation or retirement is fully exempt from income tax. However, during service, one can withdraw a partial amount of their PF in certain cases such as self-marriage, medical expenses, house construction, etc. In these cases, it will be non-refundable PF. Though in other cases, it can be withdrawn, the amount withdrawn will be subject to refund.
From India, Karnal
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PF withdrawn on account of resignation or retirement is fully exempt from income tax. However, during service, one can withdraw a partial amount of their PF in certain cases such as self-marriage, medical expenses, house construction, etc. In these cases, it will be non-refundable PF. Though in other cases, it can be withdrawn, the amount withdrawn will be subject to refund.
From India, Karnal
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Those who say EPF is not taxable, please read the following:
Taxability of EPF
Rule 9 (1) of Part A of Schedule IV provides that when an employee does not satisfy any of the conditions laid down in Rule 8, the accumulated balance paid from the recognized provident fund shall be included in his total income. The tax payable on such accumulated balance shall be the differential tax calculated for each of the years concerned as if the fund had not been a recognized provident fund.
For the calculation of tax, therefore, the accumulated balance being paid has to be split up into:
• Employee's own contribution year by year;
• Accumulated Company's contribution;
• Total interest credited on the employee's contribution;
• Total interest credited on the Company's contribution.
Since the fund is to be treated as an unrecognized fund, contributions made by the employee from year to year would not be eligible for rebate under Section 88. The company's contributions and interest credited on employees' and company's contributions each year are, however, to be ignored as the employee does not receive them year to year. So, in respect of the earlier years, the tax on the employee's salary has to be reworked each year without giving a rebate under Section 88 on his own contribution. The amount by which the total tax so calculated for earlier years exceeds the total tax previously deducted and paid for such years shall be the additional tax payable in respect of accumulated employee's own contributions.
In the year the accumulated balance is due, the accumulated company's contribution and interest thereon that is being paid are to be included in the total income of the employee of that year under salary income in view of Section 17(3)(ii), which defines the expression “profits in lieu of salary” to include the share of the company's contribution and interest thereon not exempt under Section 10(12) of the Income Tax Act. Employee's own contribution and interest thereon are specifically excluded from the expression “profit in lieu of salary” in Section 17(3)(ii). From this, it follows that the interest on the employee's contribution cannot be considered as salary. The interest on the employee's contribution is, however, undoubtedly an income as defined under Section 2(24), and the Supreme Court in the case CIT v/s G. Hyatt (80 ITR 177) has held that such interest is taxable as “income from other sources.”
PLEASE CORRECT IF BEYOND LEGAL.
Stay Cool,
Atom
From India, Phagwara
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Taxability of EPF
Rule 9 (1) of Part A of Schedule IV provides that when an employee does not satisfy any of the conditions laid down in Rule 8, the accumulated balance paid from the recognized provident fund shall be included in his total income. The tax payable on such accumulated balance shall be the differential tax calculated for each of the years concerned as if the fund had not been a recognized provident fund.
For the calculation of tax, therefore, the accumulated balance being paid has to be split up into:
• Employee's own contribution year by year;
• Accumulated Company's contribution;
• Total interest credited on the employee's contribution;
• Total interest credited on the Company's contribution.
Since the fund is to be treated as an unrecognized fund, contributions made by the employee from year to year would not be eligible for rebate under Section 88. The company's contributions and interest credited on employees' and company's contributions each year are, however, to be ignored as the employee does not receive them year to year. So, in respect of the earlier years, the tax on the employee's salary has to be reworked each year without giving a rebate under Section 88 on his own contribution. The amount by which the total tax so calculated for earlier years exceeds the total tax previously deducted and paid for such years shall be the additional tax payable in respect of accumulated employee's own contributions.
In the year the accumulated balance is due, the accumulated company's contribution and interest thereon that is being paid are to be included in the total income of the employee of that year under salary income in view of Section 17(3)(ii), which defines the expression “profits in lieu of salary” to include the share of the company's contribution and interest thereon not exempt under Section 10(12) of the Income Tax Act. Employee's own contribution and interest thereon are specifically excluded from the expression “profit in lieu of salary” in Section 17(3)(ii). From this, it follows that the interest on the employee's contribution cannot be considered as salary. The interest on the employee's contribution is, however, undoubtedly an income as defined under Section 2(24), and the Supreme Court in the case CIT v/s G. Hyatt (80 ITR 177) has held that such interest is taxable as “income from other sources.”
PLEASE CORRECT IF BEYOND LEGAL.
Stay Cool,
Atom
From India, Phagwara
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