PF withdrawal amount
kiran (accountant) (444 Points)
19 June 2022
I have withdrawal PF amount last FY it is taxable or not.
24 Replies
Eswar Reddy S
(CFO- at NHTF)
(58275 Points)
Replied 19 June 2022
If below 50k then exempt.
How much is the amount?
How many years of continuous service?
How much is the amount?
How many years of continuous service?
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 19 June 2022
Which section say that PF below 50 k is exempt????
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 19 June 2022
Where is 50000 limit.
Here is reading of Sec 10(12) from bare act:
Advertisement User Menu Income TaxArticles Exemption for amount received from Statutory & Recognized PF CA Sandeep Kanoi| Income Tax - Articles| Download PDF 18 Apr 2020 37,746 Views 1 comment Exemption for amount received from Statutory and Recognized Provident Fund Provisions of section 10(11) of the Income Tax Act exempts any payment received from the ‘Statutory Provident Fund’, whereas, provisions of section 10(12) of the Income Tax Act exempts the accumulated balance payable to an employee participating in the ‘Recognized Provident Fund’. The present article provides the understanding for both the exemption section i.e., section 10(11) and section 10(12). Understanding the Statutory Provident Fund and Recognized Provident Fund– The primary purpose of the provident fund is that it facilitates the employees with the lump sum amount, at the time of his exit from the place of employment. Broadly speaking, the provident funds can be divided into four types, namely Statutory Provident Fund; Recognized Provident Fund; Unrecognized Provident Fund; and Public Provident Fund. Since section 10(11) and section 10(12) provides exemption towards the Statutory Provident Fund and Recognized Provident Fund, we would hereunder understand some of the general basics of the same. Ads by ADVERTISEMENT Ads by The Government; Governmental bodies; railways; local authorities etc. maintains the Statutory Provident Fund. The Provident Fund Act, 1925 is applicable to the Statutory Provident Fund. On the other hand, any establishment or business entity having 20 or more employees can join the Recognized Provident Fund. The establishment/ business entity can themselves create the scheme under the Recognized Provident Fund and manage the same. However, all the Recognized Provident Fund schemes are mandatorily required to be approved by the Commissioner of Income Tax. Exemption available under section 10(11) of the Income Tax Act– Provisions of section 10(11) fully exempt the amount received from the Statutory Provident Fund. It also fully exempts the amount received from any other provident fund, which is set up and notified by the Central Government. Advertisement Exemption available under section 10(12) of the Income Tax Act– Provisions of section 10(12) exempt the accumulated balance, due and payable, to the employee participating in the Recognized Provident Fund. The exemption is available to the extent covered in Rule 8 of Part A of the Fourth Schedule. As per rule 8 of part A of the fourth schedule, accumulated balance payable to an employee covered in a Recognized Provident Fund shall be exempted only under any of the following cases- The employee has provided continuous service, with his employer, for a period of 5 years or more. In case the service of the employee is terminated before the period of 5 years, the reason for termination should be any of the following- Termination of service due to Employee’s ill-health; or Termination of service by the contraction; or Termination of service due to discontinuation of employer’s business; or Termination of service due to any reason which is beyond the control of the employee. In case of cessation of employment, the employee takes employment with any other employer, then, the accumulated balance (due and payable) to the employee is transferred to his individual account in any Recognized Provident Fund managed by such other employee
Here is reading of Sec 10(12) from bare act:
Advertisement User Menu Income TaxArticles Exemption for amount received from Statutory & Recognized PF CA Sandeep Kanoi| Income Tax - Articles| Download PDF 18 Apr 2020 37,746 Views 1 comment Exemption for amount received from Statutory and Recognized Provident Fund Provisions of section 10(11) of the Income Tax Act exempts any payment received from the ‘Statutory Provident Fund’, whereas, provisions of section 10(12) of the Income Tax Act exempts the accumulated balance payable to an employee participating in the ‘Recognized Provident Fund’. The present article provides the understanding for both the exemption section i.e., section 10(11) and section 10(12). Understanding the Statutory Provident Fund and Recognized Provident Fund– The primary purpose of the provident fund is that it facilitates the employees with the lump sum amount, at the time of his exit from the place of employment. Broadly speaking, the provident funds can be divided into four types, namely Statutory Provident Fund; Recognized Provident Fund; Unrecognized Provident Fund; and Public Provident Fund. Since section 10(11) and section 10(12) provides exemption towards the Statutory Provident Fund and Recognized Provident Fund, we would hereunder understand some of the general basics of the same. Ads by ADVERTISEMENT Ads by The Government; Governmental bodies; railways; local authorities etc. maintains the Statutory Provident Fund. The Provident Fund Act, 1925 is applicable to the Statutory Provident Fund. On the other hand, any establishment or business entity having 20 or more employees can join the Recognized Provident Fund. The establishment/ business entity can themselves create the scheme under the Recognized Provident Fund and manage the same. However, all the Recognized Provident Fund schemes are mandatorily required to be approved by the Commissioner of Income Tax. Exemption available under section 10(11) of the Income Tax Act– Provisions of section 10(11) fully exempt the amount received from the Statutory Provident Fund. It also fully exempts the amount received from any other provident fund, which is set up and notified by the Central Government. Advertisement Exemption available under section 10(12) of the Income Tax Act– Provisions of section 10(12) exempt the accumulated balance, due and payable, to the employee participating in the Recognized Provident Fund. The exemption is available to the extent covered in Rule 8 of Part A of the Fourth Schedule. As per rule 8 of part A of the fourth schedule, accumulated balance payable to an employee covered in a Recognized Provident Fund shall be exempted only under any of the following cases- The employee has provided continuous service, with his employer, for a period of 5 years or more. In case the service of the employee is terminated before the period of 5 years, the reason for termination should be any of the following- Termination of service due to Employee’s ill-health; or Termination of service by the contraction; or Termination of service due to discontinuation of employer’s business; or Termination of service due to any reason which is beyond the control of the employee. In case of cessation of employment, the employee takes employment with any other employer, then, the accumulated balance (due and payable) to the employee is transferred to his individual account in any Recognized Provident Fund managed by such other employee
Eswar Reddy S
(CFO- at NHTF)
(58275 Points)
Replied 19 June 2022
@ Kiran ,
.How much is the amount?
And how many years of continuous service completed?
.How much is the amount?
And how many years of continuous service completed?
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 19 June 2022
I think you already replied , now what happened
Eswar Reddy S
(CFO- at NHTF)
(58275 Points)
Replied 19 June 2022
The queriest has not given details about his employment. If above 5 years fully exempt
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 19 June 2022
Earlier you replied some other provision.
Eswar Reddy S
(CFO- at NHTF)
(58275 Points)
Replied 19 June 2022
Might be this .
As per the Budget of 2016-17 and the Finance Act, 2016 the threshold of Provident Fund withdrawals was raised from 30,000 to Rs. 50,000 for Tax Deducted at Source amended under section 192A of Income Tax Act, 1961. TDS is applicable on withdrawals wherein the accumulated balance is more than 50,000 and the Employee has worked for less than five years.
This new amendment is a discouragement for premature withdrawals from Provident Funds and a leap towards promoting long-term savings. These long-term savings ultimately mean more money for you at the end of your work term.
As per the provisions of the TDS Act, the rate of deduction is 10 percent on the submission of the Permanent Account Number (PAN).
As per the Budget of 2016-17 and the Finance Act, 2016 the threshold of Provident Fund withdrawals was raised from 30,000 to Rs. 50,000 for Tax Deducted at Source amended under section 192A of Income Tax Act, 1961. TDS is applicable on withdrawals wherein the accumulated balance is more than 50,000 and the Employee has worked for less than five years.
This new amendment is a discouragement for premature withdrawals from Provident Funds and a leap towards promoting long-term savings. These long-term savings ultimately mean more money for you at the end of your work term.
As per the provisions of the TDS Act, the rate of deduction is 10 percent on the submission of the Permanent Account Number (PAN).
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 19 June 2022
Yes query is about tax on of withdrawal , you are providing limits for TDS, that what I want to say. Before discussing get clear on provision
Eswar Reddy S
(CFO- at NHTF)
(58275 Points)
Replied 19 June 2022
The queriest has to give the details. Let him reply then we get to know from where we need to start
CA Rashmi Gandhi
(Chartered Accountant)
(86461 Points)
Replied 19 June 2022
He already told he withdraw amount, so same is taxable or not . But wait for querist
Eswar Reddy S
(CFO- at NHTF)
(58275 Points)
Replied 19 June 2022
Check my first answer .
It depends on various factors like how much is GTI .
If no taxable income during the year in which PF is withdrawn then PF upto 5lacs is exempt after rebate So that's why I have sought a response from queriest
It depends on various factors like how much is GTI .
If no taxable income during the year in which PF is withdrawn then PF upto 5lacs is exempt after rebate So that's why I have sought a response from queriest
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