Saturday, 11 August 2018

Is withdrawn EPF amount taxable? Know more details

PF accounts are government-run and are managed by the Employees’ Provident Fund Organisation (EPFO). The scheme was established in 1952 and was initially created to offer industrial workers with a stable income after retirement.
Contribution towards the EPF account is tax exempt under Section 80C of the Income Tax Act.

As of EPF Act, an employee has to contribute 12 per cent of monthly salary to the account. The same amount is contributed by the employer. The funds accumulated in an employee’s PF account also earns interest through the course of the individual’s employment. Currently, the rate of interest on EPF account is 8.55 per cent yearly.

An EPF subscriber ideally is supposed to withdraw their EPF contribution on retirement. However, people can also withdraw the amount under certain circumstances which include medical illness, funding marriage arrangements and purchasing a new home, among others.

EPF withdrawal taxable :-

EPF withdrawal is taxable under certain circumstances which are mentioned like below :-

NoScenarioTaxability
1Amount withdrawn is < Rs 50,000 before completion of 5 continuous years of serviceNo TDS.However, If the individual falls under the taxable bracket, he has to offer such EPF withdrawal in his return of income
2Amount withdrawn is > Rs 50,000 before completion of 5 years of continuous serviceTDS @ 10% if PAN is furnished;No TDS in case Form 15G/15H is furnished
3Withdrawal of EPF after 5 years of continuous serviceNo TDS.Further, the individual need not offer the same in the return of income as such withdrawal is exempt from tax
4Transfer of PF from one account to another upon a change of jobNo TDS.Further, the individual need not offer the same in return of income as it is not taxable.
5Before completion of 5 continuous years of service\ ifemployment is terminated due to employee’s ill health
The business of the employer is discontinued
or the reasons for withdrawal are beyond the employee’s control  

Taxability - No TDS.Further, the individual need not offer the same in the return of income as such withdrawal is exempt from tax

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5 comments:

  1. Nice information at the right time.

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  2. Hii my uan in previous and current organisation has been updated as same so iam not able to withdraw my previous organisation pf.please provide me a solution to withdraw my old pf

    ReplyDelete
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