EPF Withdrawal Tax

POSTED BY Anindya Bhattacharya ON January 12, 2013 1:25 am COMMENTS (5)

Hi,

I have worked in one IT company for 3.8 years, then switched Job.

After Joinning my 2 nd organization I have submitted PF transfer request however even after 2 years I cannot see anything happening in this front.Now I am about to move to another company after spending 2 years in 2nd company.

I want to know 

1)Can I tranfser my 1st and 2nd employer’s (both the PF) PF to my new (3rd)organization.will there be any problem because of my existing transfer request between 1st to 2nd organization(as per epf site it shows my transfer request has been rejected and details have been sent to my 1st employer)

2)Is there any way to know online why my PF transfer got rejected

3)My first pf account with organization 1 is now 3.8+2=5.8 years old even if it was active for 3.8 years only and not yet transferred.Can I withdraw that amound without tax or is it taxable.

4)If suppose after 1 year I want to withdraw PF I understand Company 1’s PF will be exmpted but  for 2 and 3 PF I will be liable to pay tax even if they are now transferred to same A/C.Is my understanding correct here?

I would really appreciate any help from anyone in this topic.

5 replies on this article “EPF Withdrawal Tax”

  1. Anindya Bhattacharya says:

    Hi Ashal,
    Thanks for your reply :).. I will file a RTI soon.
    And I would also go ahead with withdraw as it has now become tax free..wanted to transfer but it’s too long a process it seems.
    Regards,
    Anindya

  2. Dear Anindya, first of all please file an RTI in the PF office where you have filed your transfer request to know the exact reason of rejection.

    Thanks

    Ashal

  3. as per law withdrawal is possible only if there is break of 2 months between jobs and even if
    there, is for less than 5 years of continuous service you will have pay tax on employer contribution during earlier years and tax benefit you have claimed so far will also be lost! interest earned on both contributions is also taxable!

    However the 5 years of service is total service (old+new employer) so you can now withdraw without tax deductions

    Have a look:
    http://taxguru.in/income-tax/withdrawal-provident-fund-account-completion-years-maturity-taxable.html

    you will need to contact the EPF office or your previous employer to find out why it was rejected and then take necessary action I think this needs to be done for smooth continuation of the account and maybe necessary for smooth withdrawal.if you need to do so

    1. Anindya Bhattacharya says:

      Hi,
      First of all thanks for your prompt reply.

      As per the link you have provided, It says I need to have 5 years of continuous service and in my case I had 3.8 years of continuous service after that I changed my Job. The PF transfer was not successful so even if the account is 3.8+2= 5.8 years old,It was not active for 5 continuous years.So should not this be taxed?

      Regards,
      Anindya

      1. If you count the service with your first and second employer you have 5 years of service.
        I am assuming you had pf contributions during your second employment as well.
        So the account is active. ust the balance after first employment was not transferred.
        So if you withdraw it will not be taxable.

        However you should first figure out this transfer issue.
        Withdrawing is not recommended in any case as it will be useful for retirement.

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