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POSTED BY ON May 14, 2012 12:14 pm COMMENTS (19)
Hi,
I have been working almost since 3 years now. I’ll be going for my higher studies this july. So either I’ve to close my account or keep it idle. So I wanted to get clarity on few things:
1) If I close my EPF account now, how much tax will I be taxed? Is it 30% flat? Or is the EPF corpus added to my annual income and taxed accordingly?
2) If its flat 30% doesn’t it mean that I am actually losing a big part of my money?
3) Can I keep my account idle till I complete my studies(2 years later) and then activate it when I get a job?
4) Is there any provision where in I can keep depositing a nominal amount (VPF style) every year just to keep my account active?
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Hi Ashal
I left job in April 2015. I was working in this company for last 6 Years. My PF amount exceeds 2.5 L.So do my TDS will be deducted at source ?
I heard from one of my friend that I will need to pay tax for whole amount as it is exceeding 2.5 L.(though I have completed 5 Years)
Please reply.
Best regards
Vasant
Hi Ashal
Eagerly waiting for your reply on this.
Best Regards
Vasant
I HAVE COMPLETED IN MY COMPANY CONTINUOUS 7 YEARS AND MY PF AMOUNT ARE NEAR ABOUT RS 300000. IF I LEFT COMPANY FOR MY ILL HEALTH AND NOT CONTINUED SERVICES IN ANY COMPANY AND IF I WITHDRAWL THE PF AMOUNT I HAVE TO PAY TAX. I MEAN I SUBMIT MY TDS IN EVERY YEAR, BUT THE WITHDRAWL AMOUNT WILL BE TAXABLE AS IT IS EXCEED RS. 250000?
Hi, I worked for 2 companies between May 2005 and Nov 2009. When I resigned in 2009, I opted to withdraw EPF for my marriage plans, without aware of its 5 year tax deduction scheme. I followed up for 2 years, and later in June 2011, they asked me to send a mail request again for withdrawal after which I got a cheque in July 2011 with 30% tax deducted.( i got the cheque after the marriage, so the purpose of early withdrawal was not acheived, and tax was deducted)
Is this amoutn deducted claimable, as I have sent the email request again after 6 years, but the written request was sent before 5 years period. Please suggest.
justgrowmoney, ashal, manish: Thanks a lot! I’ll not withdraw the money. I’ll transfer it to new employer after 2 years. In case that doesn’t happen (god forbid) I can atleast withdraw before the account going dormant.
Thanks Ashal..Please comment whether the EPF amount (which is less than 1 lac) will be non taxable or taxable after completion of 4 yrs & 11 mnth …or there will be no tax if she invest the PPF in same financial year.
Regards,
Sunny Balwani
Dear Sunny, as she is already working in another co & getting salary from it, she is having an income, which is already taxable. Now if she opts to redeem, as the 5Y service clause is not completed, PF withdraw amount ‘ll be taxable in the year of receipt & she w’d have to pay tax on it as per her usual slab rate. In my opinion, no matter how much time it takes to transfer, chose transfer over redemption. Even if it takes 1Y, your old PF money is still earning the same interest rate of PF & more importantly, no tax is there as no withdrawl is there.
Thanks
Ashal
I joined company A on August 2005 and worked for 1 year. They created a PF account for me. Then 1 year I took a break and did some research assistantship. So no PF was deposited for that time. Then again in 2007 August I took up another job. I transferred the old PF account to the new Company. I worked in the company till 2010 January. After that i left for starting my own venture. And no PF has been deposited from 2010 january till now.
So I have totally worked for 3 1/2 years of service in 2 different companies.
I heard that PF amount becomes dormant after 3 years (There is no interest). So I am planning to withdraw the amount after closing the account. Is it advisable ?. And will there be TDS on the source on the amount ?. If yes, whats the percentage. You can assume that I don’t earn any money this year since i am running a startup. And my amount is 2.5 lakhs rupees. Or is there a way I can reactivate the account ?
Can you advice me on the same please.
I also have one query, my sister is leaving the current company just 45 days completion of 5 yrs.. but she will eligible to apply for PF withdrawal after 60 days she quits current job. but she is immediately joining the next company with in a week time .. so if she withdraw money after completion of 4 yrs & 11 mnth in old company and 1 mnoth in new company … still the amount will be taxable … plz confirm. Current company folks says it will take too much time to transfer the EPF account and there has so many such cases in the company. so she deicdes to withdraw the EPF money and deposit the same in existing PPF account. Please suggest for the same.
Dear Sunny, if the current PF amount is less than 1L, then only she can invest up to that max. possible limit of 1L Rs. in PPF account. As the PF money was meant for long term investment, she should invest it for the same purpose & time.
Thanks
Ashal
I joined company A on Dec 2007 and worked till July 2009. In between the company is overtaken by other company in June 2009. In the transformation instead transferring/continuing our old PF account, they created a new PF account. So I had 2 PF accounts for the same service.
Now In October 2009 till Nov 2010 I have joined new company where PF was not opted. (I took a break for personal reason from July 2009 to Oct 2009. Apprx. 3 months)
In Nov 2010 I joined the company which has its own PF trust. I have requested PF transfer from my two PF accounts. However 1 PF request was rejected and I withdraw the money from it. Other PF account (from June 2009) was got transferred to my current company PF account.
The company will ask to sign PF transfer/withdrawal form. The company said that if they do not receive a transfer request (with details of new employer) in 2 months, then it will be processed for withdrawal.
Now if my Last working day is 5th May 2014 and mostly I may take a break, below are my queries
1. If I withdraw my PF amount, how the service period will be considered?
From 1 June 2009 to 5 May 2014 even if there is break in service and PF membership?
2. If I withdraw my PF, is it taxable?
3. In PF withdrawal process if it’s taxable, will the PF trust deduct the applicable tax and then credit the PF amount?
4. If I ask for transfer while separation and not joined other company, company will wait 2 months and not receive any transfer request, automatically my PF get processed for withdrawal (after 5th July). In this case is my PF taxable? [As I read If withdraw it before 5 yrs, then its taxable, after 5 yrs its not]
(As till July 14. my PF membership will be more than 5 years starting from 1 June 2009)
5. For EPS, how many years will be considered? (In my service tenure my basic was > 6500)
Dear Deepaliu, as 5Y service period is not over for new service, it’s taxable. Your PF trust ‘ll not deduct TDS. As your service period is not crossing 5Y, processing of PF account later on has no meaning to be eligible for tax free status. hence your PF amount remains taxable. Good news for you as you are taking break and not working in the FY of PF withdrawal, I assume this ‘ll be your income along with salary till May 2014, hence your net tax liability ‘ll be lower.
Thanks
Ashal
The other issue is that if you withdraw it before 5 yrs , then its taxable , after 5 yrs its not .
So in your case ,it makes a lot of sense to let it be growing for 2 more years and by the time you come back , then withdraw it ,
The other option after coming back is to transfer the old one to new employer !
Dear Srinidhi, here are the answers for your query –
1. The PF amount ‘ll be added to your income from all other sources & ‘ll be taxed at your slab rate.
2. read point 1 again above interestingly as you do not have any salary income or so (almost nil) for current FY & redeem the PF amount, the total income from all other sources ‘ll be taxed @ 10.3% till 5L Rs. above the zero tax limit of 2L Rs.
3. You can keep it idle but make sure, before completion of 3Y of non operation, you get another job so that the old account can be transferred to new PF. Else interest ‘ll not be accrued after 3Y of dormant account.
4. NO, only your employer can deposit on your behalf.
Thanks
Ashal
Hi Ashal,
My sister has quit her job last week after working with the same company for 2.5 years.
On her last day, the company asked her to sign PF transfer/withdrawal form.
The company said that if they do not receive a transfer request (with details of new employer) in 2 months, then it will be processed for withdrawal.
There is a good probability that she may not join another company. In this scenario, her income will be well below the taxable income limit of 2 lac for the current FY.
Now my question is when the PF withdrawal process happens, will the EPFO credit the PF amount post TDS (just like what banks do @ 20%). Or are we required to submit Form 15G/H so that there is no TDS.
Thanks
errata!
I meant TDS @10%
Dear Ramprakash, as far as I know, EPFO ‘ll not invite TDS on PF money & onus lies on the investor to pay tax if due.
So for the given case, your sister can relax for taxation part. in case her employer process it for redemption, she should invest the same for long term.
Thanks
Ashal
Thanks Ashal.
That’s a relief.
1) Amount withdrawn will be added to income and taxed
2) NA
3) Yes keep the account idle for up to 3 years to earn interest. Thus after 2 years, perhaps, you can move the money to your new EPF. If we are lucky and EPF portability is available by then you can give the same account number to your new employer to make EPF payments
4) VPF payments are not allowed without EPF contributions!