Hi, When I switched jobs from my previous company to an MNC's Indian unit in July 2009, I withdrew my previous company's PF (No transfer was done). I worked in the MNC's Indian unit from July 2009 to Dec 2013, totaling 4.5 years, and was then transferred to the US unit of the same MNC. Since the PF cannot be transferred to a company outside India, I want to withdraw my PF.
Since I have served only 4.5 years, this is treated as premature PF withdrawal (less than 5 years). The MNC's Indian Unit's PF is managed by a PF trust and NOT by CPFC.
In the 2015 budget, the finance minister had announced that all premature PF withdrawals would attract a flat tax rate of 10%. When I contacted my PF trust stating this rule, they said that this rule is applicable for only CPFC and not the trust.
They say that the trust would cut tax based on the original rules: member share (cut all benefits taken for PF amount), employer share (30%+cess).
This will result in a high rate of tax for my PF. Can someone please clarify if the 10% flat tax rate announced by FM is not applicable for trusts? I feel that this is discriminatory.
Thanks,
njdesi
From United States, Monmouth Junction
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Since I have served only 4.5 years, this is treated as premature PF withdrawal (less than 5 years). The MNC's Indian Unit's PF is managed by a PF trust and NOT by CPFC.
In the 2015 budget, the finance minister had announced that all premature PF withdrawals would attract a flat tax rate of 10%. When I contacted my PF trust stating this rule, they said that this rule is applicable for only CPFC and not the trust.
They say that the trust would cut tax based on the original rules: member share (cut all benefits taken for PF amount), employer share (30%+cess).
This will result in a high rate of tax for my PF. Can someone please clarify if the 10% flat tax rate announced by FM is not applicable for trusts? I feel that this is discriminatory.
Thanks,
njdesi
From United States, Monmouth Junction
Acknowledge(0)Amend(0)
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PF WITHDRAWAL RULES.zip
Tax on premature PF withdrawal.pdf