Tax on pf withdrawal

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

04 January 2015 I understand that tax liability is not applicable when PF is withdrawn after completion of 5 years. However in my case scenario is little different.

I have changed my job after completing 4 and half years in April 2014 and joined a CA firm where there is no requirement of PF contribution. If I withdraw my PF balance now (i.e. January 2015) then would there be any liability on account of withdrawal since I have not completed continuous service of more than 5 years.

Kindly suggest the ways to avoid any tax liability.

Regards,
Anurag

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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04 January 2015 Tax liability will be there if withdrawn before 5 years. Withdraw the balance after 5 years. You can delay the withdrawal.

CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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05 January 2015 Dear Mr. Seetharaman please change your opinion because it will be taxable, irrespective of fact whether or not it withdrawal within 5 years

Under section 10(13) under these circumstances are only exempt
(i) on the death of a beneficiary ; or
(ii) to an employee in lieu of or in commutation of an annuity on his retirement at or after a specified age or on his becoming incapa-citated prior to such retirement ; or
(iii) by way of refund of contributions on the death of a beneficiary ; or
(iv) by way of refund of contributions to an employee on his leaving the service in connection with which the fund is established otherwise than by retirement at or after a specified age or on his becoming incapacitated prior to such retirement, to the extent to which such payment does not exceed the contributions made prior to the commencement of this Act and any interest thereon;]

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CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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05 January 2015 The withdrawal of the accumulated balance from a recognized PF is taxable if the employee has not rendered continuous services for five years or more to the employer. While computing the continuous services of five years, the period of previous employment is also included, if the accumulated balance maintained with the old employer is transferred to the PF account of the new or current employer.

Querist : Anonymous

Querist : Anonymous (Querist)

11 January 2015 thanks Mr. Mukesh and Mr. Seetharaman. I would like to clarify that here I have continued my services for 5 years or more. I discontinued it after 4 and half years. As per your replies, it seems that it will be taxable if one is not continuing for 5 years or more.