05 October 2019
When EPF is withdrawn before 5 years, from the past Q&A I've gathered that the Employer contribution and its accumulated interest should be shown under the head salary. Specifically under "Profits in lieu of salary as per section 17(3)" Is this correct? member contribution where 80C benefit was not claimed in the previous years is not shown in the ITR ? Show revised income tax for previous years in form 10E and claim relief under section 89(1). Is this correct? Please advice. Thanks
05 October 2019
Thanks sir for your quick response. 1. To clarify on the interest part - Employer contribution + interest on employer contribution under "Profits in lieu of salary as per section 17(3)" and Interest on member contribution under income from other sources. Right?
Can we show this in ITR1 itself. Or with the changes that happened to ITR2 last year is it mandatory to show withdrawal of EPF before 5 years only in ITR2. Please guide. Thanks
05 October 2019
See the link for more clarification. https://economictimes.indiatimes.com/wealth/tax/withdrawing-epf-before-completion-of-five-years-heres-how-you-will-be-taxed/articleshow/65866674.cms?from=mdr
02 December 2019
Sir, I got another notice after submitting my revised ITR along with the form 10E. In the previous instance the notice I received was with error code 999. Now resolution for error code 999 also states that revised return needs to be filed u/s 139(5). I missed this part and I filed the second return by selecting "Filed in response to notice u/s 139(9)" instead of "Filed u/s 139(5) - Revised" in ITR1. Should this create a problem? Now in the 2nd notice the error code is 202. What is confusing is that error description and resolution is same as 999. I do not know if CPC has issue with the income computation or its only to do with the ITR filing process. As a recap this is what my case was about and how I handled it - Case is regarding early withdrawal of EPF (before 5 years) for which 10% TDS is deducted on the entire amount withdrawn. However tax is to be paid only on Employer contribution + Employer contribution interest + Employee contribution interest + Employee contribution on which 80C benefit was claimed in previous years. No tax on employee contribution on which 80C benefit was not claimed (This income is not shown under any income head in the revised ITR.) Given the above explanation, the Taxable total income will be lower than the gross receipts show in form 26AS. Error 202 Description - The gross receipts shown in Form 26AS, on which credit for TDS has been claimed, are higher than the total of thereceipts shown under all heads of income, in the return of income. Thus, while credit for TDS is being claimed, the corresponding receipts are not offered in the respective income schedules, to arrive at the taxable total income. Hence, the return of income filed is regarded as defective, as provided in Explanataion (a) under section 139(9). Resolution - The relevant schedules in the return of income, based on which income is computed under respective heads, should show the total receipts, on which credit for TDS is claimed. The taxable total income has to be arrived at, after offering the total gross receipts, as shown in Form 26AS, on which credit for TDS is claimed. The correction of this defect is to be made by filing a revised return, as the said correction will result in change of income.
Please advice/guide on where I could be going wrong. Thanks
03 December 2019
The problem is not with excess income. Actually, the total income shown under all heads of income is lower than the gross receipts in 26AS. Hence the notice. This is mainly because of the EPF withdrawn. Let me explain with e.g.
In ITR1 Profit in lieu of salary as per section 17(3) – 495639 Income from other sources – Interest from employee contribution to EPF – 157544 employee contribution to EPF where 80C benefit was availed – 61337
Balance of the EPF which is employee contribution to EPF where 80C benefit was not availed i.e. 1054975 – (495639 + 157544 + 61337) = 340455 is not shown in the ITR. Is this the reason why notice is sent? Should this be shown under exempt income?
CAclubindia
