EPF Tax qery

POSTED BY Mitra_kol ON February 11, 2013 7:34 pm COMMENTS (14)

Hi,

I have worked for a company for 4 year 3 months and then switched the job. 

I have withdrawn PF amount contributed in previous company (since transfer was too long process and some of my friends faced big issues with that.)

In present company also I am contributing to EPF (But in a new EPF account)

Now will the amount withdrawn from previous EPF account be taxable now (since it was withdrawn before 5 years)?

Thanks,

14 replies on this article “EPF Tax qery”

    1. Mitra_kol says:

      Hi bemoneyaware ,

      Is this TDS deduction by previous company applicable only in the cases where PF is kept under a trust in company?

      In my case PF was deducted from salary and deposited to RPFO Karnataka.

  1. bemoneyaware says:

    Quoting from website for tds on epf
    I-T provisions provide that the trustees of a recognized PF or any person authorized by the regulations of the fund to make the payment of the accumulated balance to the employee should deduct tax at source while paying the amount. Further, the person liable to deduct tax has to issue the certificate of tax deducted at source (Form 16) within the specified time frame to the employee depicting the details of taxes withheld from the accumulated PF balance and also comply with other salary-related compliance necessities.

  2. bemoneyaware says:

    Can you ask your earlier company for EPF details.
    If TDS has been deducted and your PAN number is associated with it then it should be visible in Form 26AS.

    for details on viewing Form 26AS Viewing Form 26AS on TRACES
    TDS, Form 26AS and TRACE

  3. Dear Kaushik, I do hope that dear Ram Prakash’s reply is able to satisfy you.

    Please feel free to ask if you need more help. Please do file an RTI to know the exact statys of your acct.

    Thanks

    Ashal

  4. Ramprakash says:

    Hi

    It is tru that IT deptt. had instructed EPFO to deduct tax at source. But I seriously doubt if the EPFO is heeding to IT deptt.’s latest instruction. My take is that EPFO would not have deducted the tax, inspite of IT deptt.’s instruction and the onus is on you to pay tax. Filing an RTI would give u a clearer picture. you should be able to get a fair idea of your PF corpus from your salary slips. The final amount if no tax is deducted should be close to — sum of your PF contribution (lets say x) plus sum of your employer’s contribution ( = x – 541*n) [where n is no. of months of PF contribution] plus some interest.
    FInal PF = 2x – 541*n + interest
    Assumption — your basic is greater than INR 6500
    541 is the upper limit of 8.33% of basic

  5. bemoneyaware says:

    When the PF amount is withdrawn before five years of continuous service, it is be taxable in the hands of the individual as if the fund was not recognised from the start of the contributions.Provident Fund would be treated as an Unrecognised Fund from the beginning.

    The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
    The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
    The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.

    The Income Tax Department has instructed EPFO (Employees Provident Fund Organisation) to deduct Tax (TDS) from the withdrawal amount, if the withdrawal happened before completing five years of subscription. TDS is deducted at the rate of your income slab(if you earn more than 10 lakh it would be deducted at 30%) minimum being 10%. You would get form-16/16A for this deduction from your employer and you would need to show this deduction at the time of income tax return filing.

    For details you can read our article Tax on EPF withdrawal

    1. Mitra_kol says:

      Hi bemoneyware,
      Thanks for the reply, and I am again confused 🙁

      You mentioned “Income tax dept has instructed to deduct TDS from the withdrawal amount, if the withdrawal happened before completing five years of subscription.” and again said “You would get form-16/16A for this deduction from your employer”

      It means tax is deducted by EPFO while giving me the final amount. Then how can this figure will get reflected in form 16/16 A which I will get from my previous employer?

      I mean if tax is deducted by EPFO then how my previous employer will know about that and give me a form 16/16A?

      Regards,
      Kaushik

  6. Dear Mitra, total amount is taxable.

    Thanks

    Ashal

  7. Dear Mitra, No TDS is there on PF money as far as I know. The onus lies on the PF account holder to pay tax if any. Still please file your RTI to get your account statement. By the way, as you were in service earlier, you should have a rough Idea about your amount in PF.

    Thanks

    Ashal

  8. Mitra_kol says:

    Has PF authority have already deducted any tax (TDS) while paying the balance? How do I know that?

  9. Dear Mitra, as your service period was less than 5Y, the withdraw amount ‘ll be added to your income from all sources & ‘ll be taxed as per your slab rate.

    Thanks

    Ashal

    1. Mitra_kol says:

      Thanks Asal.
      Now I have two question in this regard.

      1) Has PF authority have already deducted any tax (TDS) while paying the balance? How do I know that?

      2) Is entire amount received from PF (empolyee provident fund and employee pension scheme) is taxable? Or only the contribution made by employer and interest given there on is taxable?

      Suppose I got

      Total amount = X(employee contribution + Y (employer contribution) + X1(Interest given on employee contribution) + Y1(interest given on employer contribution)

      Is Total amount is taxable income?
      Or Y+Y1 only is taxable income?

      Thanks,

  10. Ramprakash says:

    yes. it would be taxable. The wiser thing from tax saving perspective would have been to transfer considering you were short of 5 years of service.

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