PF withdrawal before 5 years for education purpose

POSTED BY Kiran ON January 21, 2013 10:36 pm COMMENTS (5)

Hi Manish,

I read one of your articles namely 10 hidden rules of EPF and found it very helpful.

https://www.jagoinvestor.com/2012/05/epf-facts-employee-providend-fund.html

However, I have a question on PF withdrawal.

My total work exp is 4 years till date during which i switched company once and also transferred the EPF from my previous employer to my current one. I will be quitting job to pursue higher education in May 2013 and hence will be working till mid of Apr 2013.

I want to know if I withdraw my PF amount accumulated till then (Apr 2013), will there be any tax levied on the same? If yes, then what would be my liabilities. Please let me know.

Thanks,
Kiran

5 replies on this article “PF withdrawal before 5 years for education purpose”

  1. swaroop says:

    Hi, I worked for and half years from July 2011 to this December’15 and I am going to pursue my higher studies from January. So if I withdraw my PF money, will it be taxable ? If I wait until July and withdraw what would be the scenario?

    1. Yes, it would be taxable

  2. Kiran says:

    Dear Ashal,

    Thank you very much for your response. Yes, I was anticipating something on similar lines as you have mentioned above, but i needed a clarification from some one who is aware of this process. I will be working till Apr mid in my organization and guess what, my April month compensation + my total PF is indeed less than 2 L :).

    So will I get the PF amount immediately if i intimate my company in advance that I would like to withdraw my PF? Kindly note that its a private trust and not a government owned one.

    Please let me know.

    Thanks,
    Kiran

  3. Dear Kiran, as the service period (in total from multiple employers) is less than 5Y, the PF withdraw amount ‘ll be taxable. Interestingly in your case as your income ‘ll be zero from april 2013 onwards, the only income in that FY ‘ll be PF withdraw, so your actual tax liability ‘ll be limited to the PF amount adjusted for the normal tax slabs.

    In case your total PF amount is less than 2L Rs. congratulations, no tax at all. Wit the help of section 80C, you may get till 3L Rs. amount tax free. You may even add 80D, to get 3.15L Rs. tax free.

    So now do tell us what’s your PF withdraw amount?

    Thanks

    Ashal

  4. If your total work exp is only 4 years then withdrawal will be subject to tax.

    For no tax it is 5 years continuous service (need not be with single employer)

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