Is there an option to claim the tax deducted on premature EPF withdraw?

POSTED BY Jaya Kumar ON August 2, 2013 8:37 am COMMENTS (6)

Hi, Will be really grateful to this forum, if someone would explain this, as am searching details for this for more than 2 years.

Details:

  • Opted to prematurely withdraw pdf for my marriage plans in 2009 (it was 4 yrs amount, and I contributed vpf of 5K every month to my PF account.). I was unaware of the 5year tax scheme then, and when I resigned my company gave the Pf withdraw form, and I opted it.
  • But, it was a merger company, there was no action and it took 2 years for the amount to get credited to my PF account. And in June 2011, they asked me to send a mail request again for withdrawal after which I got a cheque in July 2011. A huge sum of around 1 lac was deducted as tax.
  • Now, the sole purpose of early withdrawal for marriage expense was also not acheived, as I got it after 2 years, and I took a personal loan for the marriage.
  • Since the mail request i sent was after 6 years period, Is the tax deducted be claimed?

If you need anymore details, i can provide. Please explain.

6 replies on this article “Is there an option to claim the tax deducted on premature EPF withdraw?”

  1. Dear Jaya, in the given case & as per the info provided by you. yes there was a delay in handling your redemption request but for it, ypu can not claim any tax benefit now. At best you can claim it under section 89 relief if applicable to you.

    Thanks

    Ashal

  2. Jaya Kumar says:

    Hi Ashal, I had my PF1 (1st employer may’05 tp may’07) ) transferred to my next company (2nd employer) when I joined them. The 2nd company was later acquired by a 3rd company (but, my PF transfer from the 2nd company was not complete, when I resigned my 3rd company as it was a merger organisation).

    I had opted to withdraw the amount in sep2009 when I resigned. ( 3rd company PF+ 2nd company PF + PF1) and the period was less than 5 years.

    Had to follow up them for nearly 2 years, after which they responded saying that PF transfer has not happened till Jan 2011. So, after 4 months, they dropped a mail asking me to confirm if I still like to withdraw and mention the statement as “I would like to withdraw the pf”.

    Now in the PF settlement record , the apply date is sep’ 09 and the transfer initiated date is jan’11. But I send the mail around may/june’11.

    Please let me know if you need anymore info.

  3. Bunker says:

    Did the employer have a PF trust or was your PF with the EPFO? I have’nt seen EPFO deducting TDS on PF withdrawal irrespective whether 5 yrs have been completed or not.
    I do not know if PF trusts have the right to deduct TDS if the PF is less than 5 yrs old.

    Please note, many PF trusts do not have pension system hence they do not have mechanism to deposit Rs 541 in any pension scheme; everything goes in PF only. When you move such PF accounts to new employment where the PF is with EPFO, trouble can arise.

    Similarly, when you move from EPFO type of PF account to new job where PF is with a trust, the pension piece of previous employment may not move because the PF trust may not have a pension system to hold your previous EPS amount.

    I have been through a cycle of my PF transfer from EPFO(1st employer) to PF Trust(2nd Employer) to EPFO (3rd employer). The first pension amount did not move anywhere and hence had to withdraw only. It took 5 yrs to settle that dispute with calculations with local EPPO office, couple of phone calls to PF Commissioner and a possible plan to call Union Labour Minister’s residence late night. Those days there was no RTI and no grievance mechanism in EPFO and each case had to be a regular followup.

  4. Dear Jaya, Can you explain a bit the PF transfer thing? From your query I think, originally your PF amount was transferred from old company to new company & later on you withdraw it in June 2011. Am I correctly understanding?

    thanks

    Ashal

  5. Jaya Kumar says:

    But, the account got transferred only after 2 years. It says the
    applied date as Sep09
    transferreceiveddate as Jan2011
    And in 2011, my HR wanted me to drop a mail mentioning that “Yes, I would like to withdraw PF”.
    Is it still that the tax will be based on the previous applied date? or the later date where i dropped a mail and confirmed it?

  6. I dont think you can get any tax exemption , because what would matter is what the withdrawal request was put and the form was filled and sent . It was only within 4 yrs of starting EFP account.

    Now it took 2 yrs to process it is different thing altogether and you can blame EPFO for that. But that cannot amount to saving tax on the amount.

    I think you might want to put a RTI asking which tenure is looked at while tax computation , is it when was the withrawal form put or when the amount gets credited ? I am sure its the first one !

    Manish

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