Tax on epf withdrawal

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2012 Hello
I have changed my job in Nov 2010 (FY10-11).At that time, I had asked for PF withdrawal from my PF account. This money got credited to my bank account in Aug 11 in FY 11-12. I had not completed 5 years with my ex-employer. In the last FY 10-11, even without adding my PF contribution, I was fulfilling the 80C limit of Rs.100000 as I had investments in PPF and Pension policy. Based on this, can I claim exemption from the withdrawn amount to the extent of my contribution, on the grounds that I has not claimed it as a deduction earlier .. Pls reply at the earliest
Thanking in advance

taxindiaconnect

taxindiaconnect (Expert)
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22 July 2012 The tax is payable on withdrawal before five year of continious service

Querist : Anonymous

Querist : Anonymous (Querist)

22 July 2012 Thanks for your reply...
I agree tax will be payable since I have withdrawn before completion of 5 years of service. However, my point was that since payment received in respect of the employee’s own contribution is exempt from tax to the extent not claimed as a deduction earlier, can I use this to argue that since I had not considered my own contribution to PF in the previous year FY 10-11 for claiming deduction under SEc 80C, my own contribution included in the withdrawal amount will be exempt from tax and only the employers contribution and the interest will be taxable
Will the PF authority deduct any TDS before crediting the money into my bank account and if yes, should it appear under Form 26AS

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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22 July 2012 Your argument is sustainable but may not be considered by the PF Authorities. However, in your IT return you may recompute the taxable amount and taxes thereon.
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Interest if any received on your contribution will be taxable as interest income, and employer's contribution and interest thereon will be considered as Salary income. The provisions of IT prescribes for recomputing the income by the AO treating the RPF as URPF.
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