1. How a recognised provident fund (RPF) withdrawal is done?
2. If an employee is in service with 2 employers who maintains RPF & his PF balance is transferred from 1 employer to other employer who also maintains RPF ,also employee is in service with this 2 employers for a period of 4yrs & 9 months ,will the provident fund withdrawal be taxable? (period of service-2 yrs with 1st employer & 2yrs 9months with 2nd employer)
If yes ,what are the ways to avoid taxability other than 80C deductions?
23 July 2008
On withdrawal from RPF at the time of termination of service, the accumulated balance is exempt from tax only if you have been in continuous service for a period of five years or more.
Service rendered to the previous employer is also to be included.
If the continuous service is less than five years due to reasons beyond your control (ill health, or discontinuance of employer's business), you still will be eligible for exemption.
If not, then you will be taxed on withdrawal of the accumulated balance from the RPF.
Withdrawals from the PPF account is based on defined eligibility criteria. Such withdrawals are not taxed.
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