PF withdrawl ( confusion regarding 5 yrs completed or not)

POSTED BY Vipin ON September 11, 2012 9:31 pm COMMENTS (6)

Hi 

I have PF queries

1. worked for 1 yr 8 months in company X ( PF acct no A) total amt 50K.

2. worked in US on US payroll for 1 yr.

3. worked in india in  3 yr 4 months company X again ( new PF acct no B) total amt 2 Lacs

Now I want to change company and withdraw PF. total work in India is ( 1 yr 8 month + 3 yr 4 month) = 5 yr.

If I withdraw

1. will the whole amount be considered as taxable ( whole amt ie. 50 K + 2 Lac = 2.5 lac)

or

2. only 2 Lac would be taxable

or

3. nothing is taxable

6 replies on this article “PF withdrawl ( confusion regarding 5 yrs completed or not)”

  1. Vipin says:

    Thanks Manish for your response, I do have some more questions

    there is a gap of 1 yr i.e.

    1. 1 yr 8 months , PF in account A (continuous deposit)
    2. then no PF in any account for 1 yr
    3. 3 yr 4 months , PF in account B only
    4. PF got transferred from account A to account B ( in lat 4 months of account B i.e. account A was inactive for almost 4 yrs in between)

    Can I still expect no tax at all.

    Thanks
    Vipin

    1. Dear Vipin, although the service period is in break but as you transferred your old PF to new PF, all PF balance ‘ll be counted in continuous service & accordingly the full PF withdraw is tax free.

      Thanks

      Ashal

  2. Vipin says:

    But question is since PF of first account (i.e. 50 K in the example) has already been transferred to new PF account, how will they tract that if I withdraw 50K its not taxable and if I withdraw complete 2.5 lacs then only ( 2lacs out of 2.5 lacs ) would be taxable.

    Also I have one more point , How will they deduct tax i.e.
    A. Flat 30%
    B. they will not deduct tax and I have to file tax return with this amount taken into consideration.

    Thanks
    Vipin

    1. If the first EPF is transferred to new EPF , then no tax at all !

  3. Point 2 is correct. Your 2 lacs out of second PF will be taxable , because the first PF has completed 5 yrs of its own .

    Manish

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