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Pf withdrawal tax on leaving job before 5 yrs

Ankit (None) (75 Points)

28 August 2016

Hi, please consider a person 'X'. He joined his job in 2011 and left it in 2014. He worked for 3 years. He received the check of Rs. 3,60.000/- as his PF money in April, 2015. 'X' didnt know that this amount was taxable as people in his company said it wont be taxable. So, he didnt paid any tax or bothered about. When he went to C.A to file his tax return, C.A told that the amount is taxable because he left his job before 5 years. Now, 'X' needs to get the details of his PF account from his employer. What are things that 'X' should ask from his employer in the request letter?

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Vishal Goel (Chartered Accountant) (1688 Points)
Replied 19 October 2016

The UAN is mandatory for EPF withdrawal. The relaxation is given to only those who have left the job before 1 Jan 2014. You will get all the information from your UAN ID.

An individual has to pay tax on withdrawal of PF accumulations if the same has been withdrawn from a recognized PF account without rendering continuous services for five years or more with the employer. Your CA is right.... it shall be taxable in the financial year (FY) of withdrawal.

However, if the accumulated balance in your PF account is transferred to your recognized PF account maintained by the new employer, no tax liability shall arise due to such transfer.