Epf

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

15 February 2016 My relative was an employee of a software company from 2010 to 2012 for 2 years. Then she resigned. but she did not withdraw the amount till today. So though she left her job after 2 yrs, her PF A/c is still running continuing for more than 5 yrs.
So if she withdraws the amount now, will that be taxable or exempt?

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)
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15 February 2016 Withdrawal of Provident Fund may attract Income Tax. The Income Tax Department recently told EPFO (Employees Provident Fund Organisation) to deduct Tax (TDS) from the withdrawal amount, if the withdrawal happened before completing five years of subscription. Tax officials have cited a rule in the 1961 Income-Tax Act that taxes PF withdrawals by employees before completing five years of contributions into the EPF is taxable.

Further, as per the Finance Bill 2015, effective from June 2015, it is proposed that the Trustee of the Employees’ Provident Fund Scheme or the person authorized to make payment under the PF scheme should deduct tax at source at the rate of 10% on taxable PF withdrawal, where payment is Rs.30,000 or more. In case Permanent Account Number (PAN) is not furnished by the employee, tax is to be deducted at maximum marginal rate. Accordingly, if the PF is withdrawn, tax would be deducted at source.