Employee Provident Fund(EPF) scheme was set up to give substantial benefit to the employee at the time of retirement. Under the scheme a specified sum is deducted from the salary of the employee as his contributions towards the fund. The employer also contributes the same amount. Under the provisions of Income tax laws, withdrawal from the PF account by an employee without rendering continuous service for five years or more to the employer attracts tax. It is be taxable in the hands of the individual as if the fund was not recognised from the start of the contributions This article talks about different kinds of Provident Funds (Recognised, Unrecognised), Overview of EPF or Recognised Provident Fund, when is withdrawal exempt from tax, Tax on withdrawal before 5 years, TDS on withdrawal amount, Relief under Section 89. Our articles Basics of Employee Provident Fund: EPF, EPS, EDLIS, Withdrawal or Transfer of Employee Provident Fund cover how to withdraw, transfer EPF account.
Table of Contents
Kind of Provident Funds
When the Employee Provident Fund amount is withdrawn before five years of continuous service, it is be taxable in the hands of the individual as if the fund was not recognised from the start of the contributions i.e Provident Fund would be treated as an Unrecognised Fund from the beginning. Let’s understand different kinds of Provident Funds. Provident Fund is a retirement benefits scheme and is of following types:
- Statutory Provident Fund refers to the Provident Fund formed under the Provident Fund Act, 1925. This fund is maintained by Government and Semi-Government organisations, local authorities, railways, universities and recognised educational institutions.
- Recognised Provident Fund (RPF) – A Provident Fund to which Employee’s Provident Fund and Miscellaneous Provisions Act 1952 applies is a recognised Provident Fund. This type of provident fund is applicable to an organization with the strength of 20 or more employees(organisations with less than 20 employees can also join). A Recognized provident fund is approved by the Commissioner of Income Tax. An employer and a group of employees can start this type of recognized provident fund together by forming a trust. According to Section 80-C up to 12% of salary is exempted from the tax. Interest rate of 9.5% is added to the salary. Nothing will be taxable if the employee left the job after five years of completion of service or an employee left the job due to terminal illness. If the business is shut down, the employee is not subjected to tax. When we talk of Employee Provident Fund we usually mean Recognised Provident Fund.
- Unrecognised Provident Fund (URPF) This type of provident fund is not recognized by the commissioner of income tax. There will be no deduction under section 80-C available. Any amount of contribution is not taxable. Here, the employer’s contribution is taxable as salary income. Employees own contribution is non-taxable.
- Public Provident Fund (PPF). It was established for the benefits of the general public. Any member of public whether a salaried employee or a self-employed person can participate. It is one of the best tax saving schemes in India
Following table highlights the exemption and deduction available in respect of contribution to and payment from various kinds of provident fund.
| Statutory provident fund | Recognized provident fund | Unrecognized provident fund | Public Provident Fund | |
| Employer’s contribution to provident fund | Not taxable | Not taxable up to 12 per cent*of salary | Not taxable | Employer does not contribute |
| Deduction under sec 80C | Available | Available | Not available | Available |
| Interest credited | Fully exempt | Exempt if the rate of interest does not exceed the notified rate of interest i.e 9.5% | Exempt from tax | Exempt from tax |
| Lump sum payment received at the time of retirement or termination of service or withdrawn | Exempt u/s. 10(11) | Exempt from tax u/s. 10(12) Subject to conditions: not taxable if the employee retires after 5 years of service or due to the inability of work. Otherwise treated as URPF | Employee’s Contribution exempt from tax. Interest thereon is taxable under the head of income from other sources. Employer’ s contribution and interest thereon is taxable as Profits in lieu of Salary, under” Salaries”) |
Exempt from tax u/s 10(11) |
Recognised Provident Fund
Employees drawing basic salary upto Rs15,000 have to compulsory contribute to the Provident fund and employees drawing above Rs 6501/- have an option to become member of the Provident Fund. . Employee’s contribution is matched by Employer’s contribution(till 12%)so extra money. The contribution is divided between
1. Employees’ Provident Fund Scheme, (EPS)1952
2. Employees’ Deposit Linked Insurance Scheme,(EDILS) 1976
3. Employees’ Pension Scheme, 1995 (replacing the Employees’ Family Pension Scheme, 1971)(EPS)v
The most commonly used contribution break is as follows (There are other methods which you can check in Our article Basics of Employee Provident Fund: EPF, EPS, EDLIS):
PF contribution by the employer: A portion of the employer’s contribution is necessarily contributed by the employer into the pension scheme which is restricted to 8.33 per cent of Rs 6,500 p a or Rs 541 per month. After Oct 2015 it is Rs 15,000 per annum or rs 1250 month . If the employer’s contribution to EPF is up to 12% of the salary, then the same is exempt from tax as per the income tax laws.
PF contribution by the employee: An employee can claim a deduction from salary up to a maximum of Rs 1,00,000 per annum or Rs 1,50,000 (after FY 2013-14) under Section 80C of the Income-tax Act, 1961, on his contribution towards EPF from his taxable income.
Interest on PF contribution: The employee earns interest on the PF amount that is contributed, both by him and his employer. The accounting period of PF is from March to February every year.The government credits the interest compounded on PF balance in April every year. Such interest is exempt from tax.
| Scheme | Employee’s contribution of basic pay | Employer’s contribution |
| EPF | 12% | 3.67% |
| EPS | — | 8.33% |
It should be noted that the contribution of the employee shall be equal to the contribution payable by the employer. However, the employee may at his option contribute an amount exceeding 12 per cent,called as Voluntary Provident Fund (VPF), subject to the condition that the employer shall not be under an obligation to contribute over and above his contribution payable under the PF act.
Let’s assume, an employee starts with a basic salary of Rs. 20,000. Every year, on an average, he gets a 5% increment. He contributes 12% of his basic salary towards PF which is matched equally by his company, EPF contribution is 3.67%, EPS contribution is 8.33%. EPF Interest is 8.5%. Using EPF Calculator : Method I 3.67% the break up of Employer, Employee Contribution and Interest is as follows:
| Years | Opening Balance | Monthly basic (Rs.) | Employee PF (Rs.) | Employer PF (Rs.) | Interest on Employee Part | Interest on Employer Part | Total EPF amount (Rs.) |
| 1 | 0 | 20,000 | 28,800 | 8,808 | 2,448 | 748.68 | 40,804.68 |
| 2 | 40,804.68 | 21,000 | 30,240 | 9,248 | 2,570.4 | 786.08 | 87,117.992 |
| 3 | 87,117.992 | 22,050 | 31,752 | 10,196 | 2,698.92 | 866.66 | 1,98,605.064 |
Withdrawal from EPF exempt from tax
Rule 8 of Part A of the Fourth Schedule of I T Act provides the circumstances under which withdrawal by an employee is exempt from tax . If employee fulfills any of following conditions, payment from recognized provident fund is tax free :
- A member of the PF scheme shall be entitled to withdraw the PF amount standing to his credit on retirement from service after attainment of 58 years
- If the employee has rendered continuous service with the employer(s) for five years or more. If the balance includes amount transferred from the individual’s PF account maintained by previous employer(s), then the years of continuous service rendered to the former employer(s) would be included for the purpose of computing the five-year period.
- If the employee has not rendered continuous service of five years, but the service is terminated by reason of the employee’s ill health or discontinuance of the employer’s business or reasons beyond the control of the employee, the amount will be tax-exempt.
- Another tax-exempt case is when, on the cessation of the employment, the employee finds another job and the the accumulated PF balance is transferred to his individual PF account maintained by the new employer.
Taxability of EPF in case of withdrawal before 5 years
When the PF amount is withdrawn before five years of continuous service, it is be taxable in the hands of the individual as if the fund was not recognised from the start of the contributions.Provident Fund would be treated as an Unrecognised Fund from the beginning.
- The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
- The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
- The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
To recap, The various heads of income for income tax purpose (covered in detail in our article Income Tax overview) are :
- Salary
- Income from house property
- Profits and gains from business or profession
- Capital gains
- Income from other sources
In above example, various contributions will be as follows
- Employer’s contribution + interest = (8,808 + Interest on 8,808 for 3 year ) + (9,248 + interest on 9,248 for 2 year) + (10,196 + interest on 10,196 for 1 year) will come under Salary income
- Employee’s contribution (Assuming he has claimed entire contribution in 80C) = 28,800 + 30,240 + 31,752 will be taxable.
- Interest earned on his contribution (interest on 28,800 for 3 years+interest on 30,240 for 2 years + for 1 year on 31,752 ) as ‘income from other sources’
However, if the accumulated balance in PF account is transferred to recognized PF account maintained by the new employer, no tax liability shall arise due to such transfer. If you don’t withdraw/transfer from the PF and if there is no contribution in an individual account then you would get interest but this interest will be taxable.
Such EPF accounts are called dormant accounts. However, dormant accounts will continue to earn the interest for 36 months during which it remained dormant. Before this amendment(Apr 2011), interest was deposited in accounts regardless of whether there were any contributions coming in or not.
Just holding the PF account with the employer for five years shall not take away the tax implications. If you intend to take a job after some time(say after higher studies) you can leave your PF account and after joining transfer it to the new employer.
Tax Deducted at Source (TDS) for EPF Withdrawal
The Income Tax Department has instructed EPFO (Employees Provident Fund Organisation) to deduct Tax (TDS) from the withdrawal amount, if the withdrawal happened before completing five years of subscription.
Before Jun 1 2015,
TDS is deducted at the rate of your income slab(if you earn more than 10 lakh it would be deducted at 30%) minimum being 10%. You would get form-16/16A for this deduction from your employer and you would need to show this deduction at the time of income tax return filing. (Not sure about TDS rates, if you know please share it in comments section)
If your income in the year EPF is withdrawn is less than taxable limit (for example you are studying or not found a job) you can claim for refund.
After Jun 1 2015
- Income Tax shall be deducted at source (TDS) at the rate of 10 per cent provided PAN is submitted. TDS will be deducted if at the time of payment of the accumulated PF balance is more than or equal to Rs 50,000
30,000with service less than 5 years. Limit was increased from 30,000 to 50,000 from June 1 20016 - However, in case Form 15G or 15H is submitted by the member, then no TDS shall be deducted. These forms are to declare that their income would not be taxable after receiving payment of their PF accumulations from EPFO. While Form 15H is submitted by senior citizens (above 60 years of age), Form 15G is submitted by claimants below the age of 60 years.
- TDS will be deducted at the maximum marginal rate of 34.608 per cent if a member fails to submit PAN or Form 15G or 15H.
- TDS shall not be deducted in case of transfer of PF from one account to another PF account.
- Besides, it will not attract TDS if the employee is terminated from service due to ill health of member and discontinuation or contraction of business by employer.
- EPFO will also not deduct TDS if the employee withdraws PF after a period of five years of continuous service, including service with former employer.
- The body will also not deduct TDS where payment is less than Rs 50,000 but the member has rendered service of less than 5 years.
Relief Under section 89 of Indian Income Tax 1962
When salary or other income arrears are received in any particular year, one’s tax liability for that year increases. Simply because one’s total income for that year has increased. But having to pay a higher tax on account of arrears is unfair to the taxpayer. Had he originally received the money in the year(s) that he was supposed to receive it, the additional tax would have been staggered over this time, instead of converging in one year as a lump sum payment. Section 89(1) of the income tax act is the relief an employee can claim if he receives his salary in advance, arrears( receives salary of earlier year(s)) or receives profits in lieu of salary(ex gratuity, commuted pension). Salary in advance is when employee receives compensations under voluntary retirement scheme (VRS) and has not claim deduction under section 10(10C) of the Income tax . In this condition income will be calculated at higher rate as per section 17(3) of income tax act. Business Standard Reduce Tax Liability on Arrears
Calculation of relief u/s 89
- Step 1 : Calculate tax for the current year (including cees and education cess) on income including salary in arrears/advance/ compensations.
- Step 2 : Calculate tax for the current year (including cees and education cess) on income excluding salary in arrears/advance/ compensations.
- Step 3 : Step1 – step2
- Step 4 : Calculate tax for the year in which salary/compensation ought to have been received (including cees and education cess) on income including salary in arrears/advance/ compensations.
- Step 5 : Calculate tax for the year in which salary/compensastion ought have been received (including cees and education cess) on income excluding salary in arrears/advance/ compensations.
- Step 6 : Step4 – Step5
- Step 7 : Relief u/s 89 = Step3-step6 (if positive, otherwise nil)
- Step8 : Tax paid for Current Assessment year = Step1-step7
Illustration : Mr Mehta works for ABC Ltd. For the Financial Year 2011-12 his taxable income is Rs 12,00,000. On Dec 1 2011 he received arrears of bonus of Rs 60,000 perteraning to year 2007-2008. FOr year 2007-2008 his taxable income was Rs 2,30,000 and he had paid tax of Rs 20,600. 60,000 will be taxable in the year 2011-12. He can claim relief under section 89 as shown below.
Tax rates for FY 2007-2008 : Upto 1,10,000 Nil; between 1,10,000 to 1,50,000 : 10%; between 1,50,000 – 2,50,000 : 20% ; above 2,50,000 : 30%; Education cess : 3%
Tax rates for FY 2011-2012 : Upto 1,10,000 Nil; between 1,10,000 to 1,50,000 : 10%; between 1,50,000 – 2,50,000 : 20% ; above 2,50,000 : 30%; Education cess : 3%
| AY 2007-2008 | AY 2011-2012 | ||
| (1) | (2) | ||
| Taxable income without including arrears | 2,30,000 | 12,00,000 | |
| Tax on above income(including Cess) | A | 20,600 | 2,18,360 |
| Taxable income after including arrears | 2,90,000 | 12,60,000 | |
| Tax on above income(including Cess) | B | 37,080 | 2,36,900 |
| B-A | C | 16,480 | 18,540 |
In this case relief under section 89 will be 18,540 – 16,480= 2,060. If C(2) would have been less than C(1) then relief under section 89 would not have been available.
Income Tax Calculation for FY 2011-12(AY 2012-13) will be as follows:
| Income | 12,00,000 |
| Arrears | 60,000 |
| Taxable Income | 12,60,000 |
| Income Tax | 2,30,000 |
| Education Cess | 6,900 |
| Total | 2,36,900 |
| Less : Relief under Section 89(as calculated above) | 2,060 |
| Tax Payable | 2,34,840 |
simpletaxindia RELIEF u/s 89(1) CALCULATOR -AVAILABLE FOR DOWNLOAD explains section 89 in detail and also provides the excel sheet for calculation of Relief under Section 89.
Note: There is confusion regarding whether Relief under section 89 is applicable if withdrawal from PF is within 5 years. Have still covered it. if you know please share it in comments section.
FAQ on EPF withdrawal
Q. Will my withdrawal from PF be taxable If I leave my current organisation?
- 1. Worked in Company ‘A’ from 2013-2014 (15 months)
- 2. Worked in Company ‘B’ from 2014-2017 (36 months)
- 3. Worked in Company ‘C’ from 2017-till date (12 months)
- I have transfered my PF from “A” to “B” and “B” to “C”.
A:The total period exceeds 5 years and thus withdrawal is not taxable.
Q. How are 5 years calculated for EPF Withdrawal?
Years in which contribution has been made to Provident Fund account are counted. It can be with one employer or more than one employer provided you got your Provident Fund transferred. If you leave your job after 2 years and you do not contribute and do not withdraw or transfer your account for 3 years then still the number of years are still counted as 2 as that’s period in which contribution to EPF was made. Such accounts in which contribution is not made are called dormant accounts. For 3 years after you stop contributing your PF account will earn interest.
Q:I joined a company on 14th Jun 2007 and I resigned on 7th of Jun,2012. I cannot continue as I am going for further studies. Will my balance in recognised PF would be taxable. if yes,any ways to avoid it?
A: As you will be short by a week your PF withdrawal will become taxable if you withdraw.If you take a break and then join then if transfer your accumulated balance with the present employer to the new employer then there will be no tax implication. If you join within 3 years your PF account will still earn interest.
Q:Provident fund is taxable in which year : at the time of resignation from the job or at the time of withdrawal?
A:PF is taxable in the year you withdraw it if service is less than 5 years.
Q:I have worked in ‘X’ company from Aug 2010 to Aug 2011 and then left the company . Now I want to withdraw my PF. Will it be the taxable income from PF . If Yes then how could I save my tax?
A: Yes it will be taxable since service is less than 5 years.The tax rate will apply for the financial year in which it was withdrawn. There is no special provision to save tax on PF. You can transfer your PF account to new employer and complete 5 years and then withdraw.
Q: Is TDS applied on premature withdrawal of PF amount before 5 years or everytime you withdraw regardless of the number or years ?
A: TDS is applicable if you opt to withdraw the entire sum in PF balance before the expiry of 5 years.
- If withdrawal amount is less than Rs 50,000 no TDS is deducted.
- TDS is deducted @ 10% on EPF balance if withdrawn before 5 years of service.
- Remember to mention your PAN at the time of withdrawal. If PAN is not provided TDS shall be deducted at highest slab rate of 30%.
- You can submit Form 15G/Form15H if tax on your total income including EPF withdrawal is nil. TDS is not deducted if Form 15G/Form 15H is submitted.
Our article EPF Withdrawal before 5 years, TDS, Form 15G, Tax and ITR covers it in detail.
Q: Can I claim refund on TDS of EPF withdrawal? (Thanks to our reader Ankit for the question)
A: Yes you can claim for refund on TDS of EPF withdrawal for the year in which EPF is withdrawn. This is helpful if you withdraw in the year when your income is less than taxable limit, for example, you are studying or not working.
Q: Do we have to show the PF withdrawal while filing return?
If PF is withdrawal less than 5 years then as mentioned earlier it would be taxed as given below.
- The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
- The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
- The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
While filling the income tax form please file under appropriate section.
If PF withdrawal is after 5 years then it is exempt from tax. You have to show it in Income Tax Form under exempt income section like we show PPF Interest (as shown in our article Filling ITR-1 : Bank Details, Exempt Income, TDS Details).
Related Posts:
- Basics of Employee Provident Fund: EPF, EPS, EDLIS, EPF Calculator : Method I 3.67%
- Salary, Net Salary, Gross Salary, Cost to Company: What is the difference
- EPF Refund and Bank Account Problems
- Understanding Employee Pension Scheme or EPS
- Withdrawal or Transfer of Employee Provident Fund
Hi,
I worked in company A from 2013-17 and company B from 2017-19, for a combined total of 6 years.
My EPF with A did not have an associated UAN, only a member ID. My UAN was created when I joined B in 2017. The EPF balance amount from A was transferred to this UAN in 2017.
The issue is that my service history associated with this UAN shows only 2 years of service (2017-19), not my service with A. Given this, if I withdraw my balance now, will the system only recognize 2 years of service and deduct TDS?
Is there any way to confirm that the system recognizes 5 years of continuous service?
Thanks!
Your passbook does show the transfer of EPF right?(ref http://bemoneyaware.com/eps-transfer-epf/)
You can file an EPF query and ask for Annexure K as explained in the article http://bemoneyaware.com/epf-grievance-complaint-online/
Annexure-K of EPF is a document which contains details of the EPF account. It is an internal document sent between regional EPF offices during the transfer of the accounts. It is especially useful during the transfer of EPF from exempted private trusts
More details here http://bemoneyaware.com/eps-transfer-epf/
Thanks a lot! I will file a grievance as you suggested to get Annexure K.
So if I understand you correctly, there will be no TDS deducted by the system even if the UAN service history shows only 2 years, as long as the Annexure K contains the full 6 years?
Edit: I tried downloading Annexure K directly from the option in the EPFO portal, but it said “No exempted to unexempted provident fund transfer claims associated with the UAN”. Does Annexure K only cover transfers from exempted funds?
Thanks.
Hi,
Thanks for this really informative article. However, I am a bit confused with the meaning of continuous service. I worked with a company for 2.5 years. Then I took a break for 6 months and joined another company and worked there for 4.5 years. The UAN history shows the contributions of both the companies. So, in total I have worked for 7 years but there was a break of 6 months between the two companies. Does this contribute to 5 years of continuous service? Is there any online reference of definition of 5 years of continuous service?
Thanks,
Rahul.
Years in which contribution has been made to Provident Fund account are counted. It can be with one employer or more than one employer provided you got your Provident Fund transferred.
If you leave your job after 2 years and you do not contribute and do not withdraw or transfer your account for 3 years then still the number of years are still counted as 2 as that’s period in which contribution to EPF was made. Such accounts in which contribution is not made are called dormant accounts. For 3 years after you stop contributing your PF account will earn interest.
So you have total 7 years of EPF contribution
Have you transferred your old EPF account to new
Our article Why should one transfer old EPF account to new employer? covers it in detail.
Good day,
Thanks a lot for very informative blog on the EPF withdrawal.
I am in a situation and would highly appreciate your guidance:-
1. I am shifting outside India for working overseas.
2. In India, I am presently employed with a company for about a year. They have their own PF trust.
3. Previously I worked with two companies, with a break of about 2 weeks each time. On both occasions, I got the EPF transferred to new company and presently the amount is transferred to the EPF trust. Total service is more than 5 years, with break in between two jobs.
4. My present company accounts department is insisting that above does not come under “Continuous service” and therefore TDS will be applicable.
Can you please clarify if above will be under the TDS and any reference which I can advise the accounts department?
Many thanks for your assistance.
Rgds,
Abhishek
Hello,
I am on a break from job for 1 year and trying freelancing. During this year my EPF withdrawal amount is the only income. The total amount is taxable. EPF is withdrawn before 5 years and EPFO has already deducted 10%TDS. Besides the regular exemptions, I am unable to claim medical bills, LTA, expenses for freelancing in ITR 1. Can I claim any exemption to reduce my tax liability under section 10(14) and reduce it from my EPF amount?
Shail
I have withdrawn my pf through online EPF portal and my service is less than five years. But TDS was deducted at the maximum slab since I have not submitted my Pan in EPF portal. Is there a way to reimburse the TDS deducted ???
For the TDS that is deducted, there is no way to map it to your PAN.
Do you have a PAN?
If yes, provide it to EPFO and ask them to revise the TDS with your PAN details.
If you claim it while filing ITR then as it does not show against your PAN your TDS deduction claimed will be rejected and you would get an income tax notice.
Do remember that before 5 years EPF withdrawal is taxable
Hi,
My service is less than 5 years and my PAN is not been verified under EPFO Website, but i need to withdraw the amount. If my settlement amount is only 70,000 TDS at 34.6% will be applicable for whole this 70,000? or the amount which exceeds 50,000 ie, 34.6% of 20,000? Kindly revert me.
Thanks & Regards,
kushal M Joy
Dear Madhanagopal,
My service is less than 5 years and the PAN is not been verified under epfo website and now i need to withdraw the amount. My question is that if my settlement amount is only 70,000 TDS @ 34% will be applicable for this whole amount or the amount which exceeds 50,000 viz 34% of 20,000?
Hi,
I have worked in TCS (Tata Consultancy Services) for 4.5 years and they maintain PF by their own Trust. (EPFO allows establishments to maintain their own PF trusts provided they comply with EPF and MP act,1952 and provides at least at par services and benefits like EPFO. Since EPFO doesn’t directly handles accounts of exempted establishments it doesn’t have record of them hence I cannot see ur passbook in Your UAN login.) I changed job and transferred my PF to my new company (organisation B) in which I have worked 4 years. Now, I have left job with organisation B and doing my own freelancing work.
My question is since UAN login shows no details of my employment with TCS, Would my tax be deducted? If yes, how do I stop it? How do I provide them information of my employment with TCS?
If my Tax would be deducted due to no record of previous employment. Can I avoid this situation if I don’t withdraw my PF immediately after quitting the job and let the money sit in PF account till the completion of 5 years? Is that even an option?
Your service history should reflect that.
Can you send the following to our email id bemoneyaware@gmail.com
1. snapshot of the View->Service History after logging in to UAN website? Is it similar to the image shown below
2. How do you know that your account was transferred? Any proof (UAN passbook showing the transfer)
Typically when you work in multiple companies and transfer the amount to one UAN then your service history should be as follows
I am an int’l worker (IW). worked with an employer for one year in 2009. I have a PF balance of 9 lakhs.
I am 58 years and want to withdraw the balance now. I was told that a TDS of 10% will apply. However I would like to know if the actual tax slab on my PF would depend on my tax slab in the year of withdrawal. For example my tax slab is 35.5% based on my current income. Do I have to pay additional tax on my PF on top of the 10% already deducted?
Thank you for your reply.
Are you a resident of India still?
Which country do you belong to?
TDS is applicable on withdrawals wherein the accumulated balance is more than 50,000 and the Employee has worked for less than five years.
In case of EPF withdrawals before 5 years of service:
Tax Deducted at source: TDS is applicable @ 34.608% in case of NO Permanent Account Number (PAN)
Tax Deducted at Source: TDS @ 10% is chargeable when Permanent Account Number (PAN) is submitted
So TDS does not depend on the tax slab
Dear Admin,
My Question is as follows:
1: worked in COMAPNY A from Nov-2012 till Aug-2014
2: Worked in Comapny B from Aug 2018 till June 2016
So all together (3y and 8 Months something)
Now i have joined job in a foreign country and basically have the NRI status.
My question is do i have to fill the form 15G for the PF withdrwal along with Composite claim Form-19?
Also if yes for 15G, then who has to fill 15-G part-II?
I guess the second company you worked in was Aug 2014 to June 2016.
As your total contribution in EPF is less than 5 years your EPF withdrawal will be taxed.
Have you transferred your EPF from company A to Company b?
If you are planning to come back to India and work in India I would recommend not to withdraw EPF.
It would earn interest even if there is no contribution.
If you still want to withdraw then how are planning to withdraw- submit the claim online or through the employer?
If online then you have no way to submit Form 15G and TDS will be deducted and you can claim it while filing ITR.
If through the employer you can submit Form 15G and no TDS will be deducted. Our article How to Fill Form 15G/15H explains it in detail.
Good day, My challenge is as follows:
Worked with Company A for about 2.5 years
Worked with Company B for about 7 years. There was continuity of employment between A and B.
Transfer of PF not done for A to B.
Wish to withdrawn my PPF balances with both A and B after the wait period. While I understand the balance in B will not be taxable, need to know if the balance with the fund of A is also exempt as I did not have a break in service.
Regards,
As your total EPF contribution is more than 5 years(with or without break) your total EPF withdrawal is tax free.
Please submit Form 15G while withdrawing your EPF from company A.
Good day, My challenge is as follows:
Worked with Company A for about 2.5 years
Worked with Company B for about 7 years. There was continuity of employment between A and B.
Transfer of PF not done for A to B.
Wish to withdrawn my PPF balances with both A and B after the wait period. While I understand the balance in B will not be taxable, need to know if the balance with the fund of A is also exempt as I did not have a break in service.
Regards,
hi sir,
i leave my last comonay and withdraw entire pf amount, for that i cliam 80c in three different FY, now this year it’s come under taxable income due to less than 5 year service, so it’s is possible that i show some of my contribution under exempt income by revision of itr of previous year and remain for taxable for current year.
Can I recently say what a relief to locate someone who really knows what theyre discussing on the internet. You actually understand how to bring a worry to light and make it critical. More and more people must look at this and understand this side with the story. I cant think youre not more well-known since you also certainly provide the gift.
Hi,
I joined company A on March 2013 and left on Jan 2016. I’m not working anymore as I got into charity.
My PF amount is about Rs 3.5 lac, if I withdraw my PF, 10% TDS is applicable (as I’m giving PAN else 36.4% Tax), is that correct?
Even if I submit form 15-G 10% TDS will be deducted as it is more than Rs 50,000, is that correct?
If DON’T submit 15-G and just file the PAN number, 10% TDS will be deducted, if I Withdraw now, is that correct?
If I withdraw this same PF by March 2018 (which is 5 years+), there won’t be any TAX applicable, is that correct?
Please clarify me.
-jeni
I have a question- I left my last job in 2014 after working there for 1.8 years. I want to withdraw my PF and my previous employer told me that they will charge me TDS for the withdrawal. I want to know after this TDS is cut, is there any other tax liability that i have in the financial year that i get my PF settlement? or is having TDS deducted enough?
HI , I am Manoj
I have completed 5.6 year in company A & left ;after that i joined Company B which i am currently working. so now i want to know if i want to withdraw my PF the it will be taxable???
2)the PF amount if about 7lac so is it taxable or TDS applicale if yes how much.
3) Whats about Pension Fund – can i withdrow Pension fund also.. is it allowed.
plz reply.
I am planning to make a partial withdrawal from EPF for purchase of flat. I have completed 10 years of service. How much can I withdraw? 36 times “salary” is mentioned in instructions here – http://www.epfopune.gov.in/advances.html. However, want to clarify if there has been a change in withdrawal rules pertaining to employer, employee contribution and interest.
Hi,
I am planning to take early retirement, I am member of PF for 15 years in the current company, I would like to withdraw entire PF amount. What are the tax implications?I have some amount as VPF.
The Voluntary Retirement Scheme is a legal way to down size and thus it involves certain technicalities. Rules vary for Govt and Private jobs.
The VRS candidates must have worked for the organization for minimum of 10 years and also the age of the worker must be minimum of 40.
Employees not complying with these conditions still can apply for the early separation but it would not be counted as the VRS legally. Thus these employees wont be able to avail the benefit of tax exemption.
The employees receiving VRS can get the tax exemption for the amount of Rs. 5 lacs lumpsum.
The Voluntary Retirement Scheme is given tax exemption as per the following limits:
Least of following :
Last drawn salary × 3 × completed yrs. Of services or Last drawn salary × remaining month of service which ever is higher
Rs. 5,00,000
Actual compensation received
Anyone receiving more than Rs. 5 lacs would be charged under Income Tax Act
The normal benefits that an employee typically gets
:1. Provident fund
2. Encashed accumulated leave
3. Gratuity
4. Salary for the notice period
5. Cost of transfer to the hometown
Hello,
I wanted to know if I can withdraw my PF even while I am employed after completion of 5 years in service?
EPF is for retirement purpose so you cannot withdraw while working but you do partial withdrawal for specific purpose . Our article EPF Partial Withdrawal or Advance explains it in detail
Dear Sir,
I have two questions regarding EPS withdrawal:
1. Is EPS taxable if withdrawn after 5 years of service?
2. As per my understanding, EPS is calculated using the following formula:
Average Pensionable Salary * Withdrawal Factor
Where Average Pensionable Salary = Total salary on which Pension amount was calculated / Number of months
For e.g if ABC’s basic salary from 1st Jan, 2014 to 31st Dec, 2014 was 14000 and from 1st Jan, 2015 to 30th Apr, 2016 was 16000 then
Total Pensionable salary from 1st Jan, 2014 to 31st Aug, 2014 will be 6500 * 8 = 52000
Total Pensionable salary from 1st Sep, 2014 to 31st Dec, 2014 will be 14000 * 4 = 56000
Total Pensionable salary from 1st Jan, 2015 to 30th Apr, 2016 will be 15000 * 16 = 240000
Average Pensionable Salary = (52000 + 56000 + 240000) / 28 = 12429
EPS withdrawal amount = 12429 * 1.99 = 24734
Is my understanding correct?
Hi I need some help here. I have withdrawn my PF in March 2016. The amount was credited in March 2016. But by mistake PF office debited the TDS of 10% from it. When I raised the grievance they reversed the amount in April. However now while filing ITR, there is entry of the TDS amount in TDS2 schedule. What should I do and how should I file ITR
By reversal I assume, EPFO repaid the TDS amount to you. You may check Form26AS available on IT portal again to see if the reversal entry is updated (In my case they did). If not, you may manually delete TDS2 entry and submit ITR. Otherwise, you may get TDS credit once more this time from ITD :))
Actually am not able to access traces as i am out of india right now. I am also a bit concerned that if i delete this tds from my itr and if the pf office doesnot reverse the entry then i may have a demand from the IT department next year for this amount
I have two questions regarding EPS withdrawal:
1. Is EPS taxable if withdrawn after 5 years of service?
2. As per my understanding, EPS is calculated using the following formula:
Average Pensionable Salary * Withdrawal Factor
Where Average Pensionable Salary = Total salary on which Pension amount was calculated / Number of months
For e.g if ABC’s basic salary from 1st Jan, 2014 to 31st Dec, 2014 was 14000 and from 1st Jan, 2015 to 30th Apr, 2016 was 16000 then
Total Pensionable salary from 1st Jan, 2014 to 31st Aug, 2014 will be 6500 * 8 = 52000
Total Pensionable salary from 1st Sep, 2014 to 31st Dec, 2014 will be 14000 * 4 = 56000
Total Pensionable salary from 1st Jan, 2015 to 30th Apr, 2016 will be 15000 * 16 = 240000
Average Pensionable Salary = (52000 + 56000 + 240000) / 28 = 12429
EPS withdrawal amount = 12429 * 1.99 = 24734
Is my understanding correct?
After 5 years EPF and EPS both are tax free.
Amount of EPS is fixed was 651 till 30 Sep 2014 and became 1251 after 1 Oct 2014.
The amount you will receive is not based on the balance in your EPS corpus. It is based on your basic salary and no. of years of service that can be considered after rounding up as per the table above.
For Ex: An employee exits from employment after 3 years and 8 months of service with a basic salary on exit Rs. 5,000 – then they will get Rs. 19,250 (5000 * 3.99)
I have worked in Company A for 1 year, Company B for 3 years, Company C for 1 year, Company D for 4 years. I have got the PF from Company A and B to the PF Account of Company D. I have withdrawn PF from Company C which has it’s own PF Trust. Now together, the PF balance in Company D is for 4+3+1 = 8 years, but in between there is a one year gap. Now I’ve changed by company again. If I withdraw the balance from company D, would the amount be taxable as the last continuous service is 4 years only or since the balance is for 8 years it wouldn’t be taxable?
I need this info as I need the money urgently to clear a loan, responses are highly appreciated.
Thanks in advance.
Total years of contribution for you would be taken as 8 years as you transferred your earlier EPF account.
So you don’t need to pay any tax on EPF Withdrawal
Hi Sir,
I am a person from Tier-2 city, I lost my job in May 2015, currently am doing only part time job, and my total taxable income is 1,42,000. Received PF withdrawl amount in December 2015 3,60,000 tds cut at 36,000 ( even though submitted 15G they have cut it ). in this organization worked only for 4.2 years.
Request you to suggest this PF amount I have to consider for FY 2015-16 ? or should i pay all the taxes that were exempted previously ?
and I don’t have any PF pass book, so I do not know employer contribution seperately. can I add PF amount in other income completely. will it be a big mistake ?
Could not get proper information in Tier-2 city request you to suggest Sir.
As you worked less than 5 years, you have to pay I.T (as per 2006 rules)
The TDS part introduced in 2015 and as the amount 3.6L is more than 250000 threshold, they have deducted TDS.
Now, 2 ways to file for Taxing.
1. simplest way: if you donot have records of the past then it is better to club this 3.6L with your current year salary and file I.T ( I did this way as I donot recollect the past records)
2. During your 4.2 years work, if you have not claimed EPF under 80C then your EPF accruals now is non taxable But this is rare situation for many of us as the employer by default will include EPF contributions and issue Form16. So you may revisit Form16s of the past to decide. ATB
Dear Sir,
I have withdrawal PF in july 2015 after service of 4 years. when I add this PF in my taxable income of A/y 2016-17, it is taxable at 30%. Can I claim relief u/s 89 (1) for employer contribution and interest thereon? your early response will highly appreciate because last date of filing ITR is 31/07/2016.
Dear Sir,
I have withdrawal PF in july 2015 after service of 4 years. when I add this PF in my taxable income of A/y 2016-17, it is taxable at 30%. Can I claim relief u/s 89 (1) for employer contribution and interest thereon?
I have worked with a corporate for one year and withdraw the PF amount, as PF was maintained by trust in that organization, I have received form 16 for the tax deducted on PF. But the withdrawal amount is less than 30000/- than why they deducted the TDS and can I claim refund now while filling the ITR on that?
please reply
You can clarify with your old organisation as to why TDS was deducted.
Yes you should show TDS deducted but also remember that EPF withdrawal before 5 years is taxable
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
Yes EPF withdrawal before 5 years is taxable butin my case I can claim entire TDS deducted as refund as amount is less than 30000.
Am I right?
I have worked with a corporate for one year and withdraw the PF amount, as PF was maintained by trust in that organization, I have received form 16 for the tax deducted on PF. But the withdrawal amount is less than 30000/- than why they deducted the TDS and can I claim refund now while filling the ITR on that?
I have withdrawn my EPF this year and i have worked for 2 years. Do i need to show the amount in this year ITR or do i need to revise the ITR of prev years? I have received a sum of Rs40000. Also do the income received from EPS withdrawal need to be shown in ITR?
No you do not need to revise return of earlier years . As per section 139(5) of the Income-tax Act, 1961, the revised return can be filed before the expiry of one year from the end of the relevant assessment year or before the completion of assessment by the income tax department, whichever is earlier.
When the PF amount is withdrawn before five years of continuous service, it is be taxable in the hands of the individual as if the fund was not recognised from the start of the contributions.Provident Fund would be treated as an Unrecognised Fund from the beginning.
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
I have claimed employee’s contribution of PF under 80C in my prev ITR. Do i need to show this as income from salary for the current FY? What about EPS withdrawal amount which is Rs18000? Do i need to show in the ITR?
Hi
This site is really interesting
. However i am not able to find answer for my query. Please help.
I worked for company A for 8.5 years.
Joined company B and transferred PF money from A to PF account in B. Worked in B FOR 2 YEARS.
So total age of PF (account accumulated) is around 10.5 years.
I left job in B and joined overseas company. Now my resident status is NRI.
If i withdraw PF amount to my NRO account, do i need to pay tax even though my total age of PF account is 12 years as of now out of that 10.5 years cobtribution was regular.
Thanks. No as you have contributed for more than 10 years you don’t have to pay tax as epf withdrawal becomes tax free after 5 years of contribution.
You would get scheme certificate for EPS as contribution is more than 10 years.
Govt is planning to come out with epf withdrawal online facility in Aug.
But you would have to see tax implication in the country of which you are resident now.
For example In countries like the US, the interest earned on the PPF will be taxable. PPF does not qualify as a retirement account under the US tax laws and therefore the interest will be taxable in the US. Now, the question is whether you should pay tax every year on the accrued interest or on the entire interest at the time of withdrawal. While there is no rule on this, a taxpayer can take a view depending on what is beneficial to him. For instance, if you expect to be in the high tax bracket when you withdraw, then you might pay higher tax at that time. In such case you might want to pay tax every year on accrued interest. But whatever method you choose, ensure that it is followed consistently.”
Dear Sir,
My wife had worked for 4 years from 2002 to 2006 in an organisation which was covered under EPF(Regional PF Commr).She resigned in 2006 and subsequently worked in various small organisations which were not covered under PF,and has retired recently.She is now 62 years old.
When she applied to EPFO for withdrawal of the amounts in my account a few months ago in PY 2015-16,the EPFO has remitted the amount of about Rs 2 lakhs after deducting TDS @10%.
I would like your advice on two points:
1. I am of course aware that PF withdrawal before completing 5 years attracts tax.But is it taxable even if it is withdrawn many years later after attaining the age of 58 OR can she claim full exemption in her return for PY 2015-16?
2. On going through her old Tax Returns for the period 2002-06(when she was covered under PF) I find that her income would have been below the taxable limit even if I add back the PF contributions.In other words she had not derived any tax benefit in those years due to PF.All the assessments are of course completed long ago,so she cannot file revised returns.Is there any way to claim the refund of TDS on PF in such a case?
Grateful for your advice.
Dear admin/bemoneyaware/any other tax expert,
I and one of the blog comment’er (renuka dated July 13, 2016 at 5:24 PM) has similar query as how to file ITR for pf amount received in bank under following circumstances
pf account is terminated within 5 yrs
pf passbook is unavailable on epf website using UAN
pf fund is deposited in bank account around 2l
pf interest is deposited separate transaction around 19k
TDS 10% is deducted for principal pf amount
it slab is now 20%
and do we need to show proof of pf interest on itr, or just mentioning in “other income” is okey?
please help us.
thanks in advance.
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
You would be entitled to avail relief under section 89.
Tax will be deducted at source at 10% if the taxable PF amount is more than Rs.50,000 and provided the Permanent Account Number (PAN) of the individual is available. If PAN is not available, then tax would be deducted at maximum marginal rate.
Sir,
I had received PF amount from my last Employer, for which tax already deducted. This amount is withdrawn before 5 Years.
Kindly advise, under which section I have to show this Income at IT Return e-filling.
Hi,
In my old PF account I have around Rs 15000 and in latest PF account 45000.Please do let me know,whether I can show these two amounts while filing income tax.
You dont’t have to show PF amount in ITR.
Dear Admin!
Regarding EPF withdrawn:
I have withdrawn PF for 2 companies, mentioning here as company A & B:
1) Company A DOJ and DOE -13 Sep 2010 to 15 Oct 2013 (I transferred my PF balance of Company A to Company B)
2) Company B DOJ and DOE – 21 Oct 2013 to 12 Mar 2015 (Own EPF Trust)
3) EPF Amount credited in the month of Dec 2015 (EPF trust has deducted TDS @ 10% of Total amount (around 2 lakh)
4) I now joined a new company in Mar 2015 & have new PF account.
Now problem is, there is no epf passbook at UAN portal for both the companies, no idea how I’ll get those data?
Should I need to add that PF amount while filing IT return for the FY 2015-16. I have received Form 16A (from company B) for the same and it is reflected in Form 26AS.
My slab rate is changed. If there is any tax liability on me than I need to pay more tax, if I’m right?
Please advise how my tax liability will be computed for the F.Y 2015-16.
Thanks!
Hi Renuka,
I have exactly same problem, epf termination within 5yrs, 2lacs lumpsum amt, 10% tds deducted, no passbook available on epf website using UAN, Tax slab increased to 20% n desperately searching on google to find out right information but in vain :(.
if you get any information will you please share it with me?
apart from this.
This guy says itr you have to file for the FY in which you receive the PF fund
and
somebody says, we have to file itr on each FY since we are using this pf amt as exemption under 80c. please read this
http://www.planmoneytax.com/tax-on-epf-withdrawal-new-tds-rule-flowchart/
I request you again please share any hint/clue if you get, i will do the same if i get any right information.
Thanks in advance
Coming to your question on revision of return. Our interpretation is as follows
Revision of returns means you have realised that there is mistake in filing returns and it has to be done before the return is processed.
Quoting from Livemint You can revise income tax return within the given time limit
As per section 139(5) of the Income-tax Act, 1961, the revised return can be filed before the expiry of one year from the end of the relevant assessment year or before the completion of assessment by the income tax department, whichever is earlier. So, for instance, if you have already filed your return for financial year 2013-14 (FY14) before the due date, 31 July 2014, but want to make modifications, you can file a revised return till 31 March 2016. However, if the income tax department has already completed the assessment of your return, then you cannot file a revised return
Lets look at reversal of tax deductions ex: Home loan 80c principal if house sold before 5 years from Moneycontrol Sale of realty before 5 yrs & benefit reversal
If the property is sold before the specified time period then the deduction that was actually taken earlier would be reversed. This will require the individual to go back to their previous tax returns and check the exact amount that they have claimed as a benefit or deduction under this head. This will involve some work of totalling up the exact figures for this specific purpose. Another detail which should not be missed out is that in case registration and other fees have been claimed at the time of the purchase of the property then this will also need to be reversed along with the other capital repayment. The impact of the reversal is that the amount that was claimed as a deduction earlier would be added back as the income of the individual for the year. This is a significant point because it can add quite a bit to the overall income of the individual in the year in which the reversal takes place and this could swell the tax liability along with the interest payments in case the advance tax limit is breached.
Hi,
I had a query regarding pf withdrawal and I was hoping you could address it…
I am working since 6 years. And now I will be quitting due to wedding and in future will not be working. I have about 4 lakhs in my epf account (2 lakhs my contribution and 2 lakhs employers contribution). I will be applying after 60 days of unemployment i. e. in mid August. Will I get my full pf amount for my wedding?
Asking this query as I had read it in some news that from Aug 1 there are going to be some restrictions on pf withdrawal
Thanks,
Priya
priya,
since you have completed more than 5 years of continues service (6 years in your case) with your employer you can with draw 100% EPF amount and no tax will be applicable.
In this case:
1. Worked in Company ‘A’ from 2003-2004 (15 months)
2. Worked in Company ‘B’ from 2004-2007 (36 months)
3. Worked in Company ‘C’ from 2007-till date (52 months)
I have transfered my PF from “A” to “B” and “B” to “C”.
What should be Date of Joining in Form -10C? First company joining date or last company joining date?
Regards,
Sai Akella
The Form says Date of Joining the Estt. , details such as PF number are of the establishment where you were last working.
So you should mention date of joining of last establishment.
Please confirm it with your employer and do let us know incase you come to know something different.
Hi,
I have withdrawn my PF for service of 3 years in July 2015.
The amount credited in my bank is 80,286 + 17,275 = 97,561/-
Now which amount should I have to show in “Income from other sources” while filling e-return?
Dear Sir,
I am told by me employer people that the GOI Circular that wef 10/02/2016 one cannot withdraw the Employer Share even though one has continued for service for more than 5 years and that now there is no bar in withdrawing the full amount of both employee and employer share on resignation/retirement provided one has continued in service for more than 5 years. Request you to please give your views on this.
Rgds
i have worked in company for 14 years, from 1998 to 2012 and then left job and started my bussiness., i have withdrawn my pf in 2015. but my employee has debucted tds on it. total pf was arround 1500000 whereas tds dbucted is on 120000 i.e rs 12000.
can anybody help in this as i worked for 14 years but still tds deducted and can i take refund of this
That’s sad to hear. Please verify with your company why the TDS was deducted.
Check form 26AS to see that TDS deducted is reflected against your PAN.
As you have worked for more than 5 years TDS should not be deducted. If TDS is showing in Form 26AS you can ask for refund while filing ITR for this year.
i have worked in organisation from july 2012 to august 2015.now i have quit job and not in job right now.How can i withdraw my epf and how much tax willl be deducted plz help
Dear sir,
i have have completed 5 years of service in same company, as per new tax rule, if i withdraw the PF will it be taxable?, is this rule applicable from June 1 2016?if yes so can i initiate the pf with draw now only before 1 june 2016, so can i get pf with out tax as per old rule(no tax after 5 years completion)
Thanks,
Rekha
Few things
1. You cannot withdraw from EPF when you are still in service. You need to be unemployed for 2 months. You can partially withdraw from you EPF while in service for repaying the housing loan, Marriage, Treatment,subject to prescribed condition. Our article EPF Partial Withdrawal or Advance talks about it in detail.
2. Withdrawal before 5 years is still taxed. There is no change in law. As you have completed 5 years if you meet conditions of withdrawal you won’t have to pay on EPF withdrawal.
3. From 10 Feb 2016 you can only withdraw your own contribution. The employer contribution will be locked till 58 years.
4. In the budget on 29 Feb 2016, FM proposed about tax on EPF withdrawal. There has been lot of criticism of Govt on it. This a proposal and would eb effective only after 1 Apr 2016. People are expecting FM to roll it back. Our article Budget 2016 and Tax on EPF covers it in detail.
can anyone pls explain with calculation ?
Suppose a employee is 40 yrs aged and in 30% tax bracket, after 20 yrs his total PF fund will 01 crore at the time of retirement.
Since 40% is tax free means balance 60 lac is under tax-bracket but not able to know the calculation to clear following points.
1)Whether whole 60 lac will be taxable means I have to lose 18 lac (60*0.3)?? If yes then its really shame.
2) Out of 60 lac how much money will be considered under “Interest earned” which is to be taxable?
3) Taxable Interest portion will be calculated for “”Interest earned on retirement year”or Interest earned since inception”?
Thanks in advance
If VPF is deducted from salary whether at the time of retirement whether contribution towards VPF is taxable or not? What would be the tax liability at the time of withdrawal of full sum standing in the credit of PF of the employee at the time of retirement by the employer.
Sir,
I am subscriber to EPF from December 2004. I worked for a company “M” until 30th August 2013(4.10Years). Then, I joined another company “I” in September 2013 and continued working there till 9th Jan 2015 (17 Months). I tried transferring my pf from company M to company I but, for some reasons company M rejected my transfer claim. Since, Jan 2015 I am not working and hence, not contributing to PF. I have the below questions sir,,
1. Can I transfer my PF from company M to company I – now? (i left the company I 13 months before)
2. Will my continuity of service calculated separately for company M and company I?
3. if I opt for withdrawal of PF from both company M and company I – will I invite TDS?
Kindly help sir.
1. Yes you can transfer your EPF from company M . you do have a PAN number right?
2. Your service calculation would be : Years in company M + years in company I if transfer happens.
3. TDS comes into play if you have contributed for less than 5 years in EPF. In your case EPF of company I and company M are separate. So for company M TDS will come into play as you contributed for 4.10 years. Even for company I if you withdraw TDS will be come into play.
Are you planning to work? If yes Then once you start EPF transfer EPF from M and I to new company.
If you want to withdraw then EPFO has no way of knowing that your two EPFO accounts are same unless you consolidate them
Dear Sir,
I left the company in 3 years, then I withdrawn the EPF amount. Please tell me whether Tax on EPF deducted at source or I need to show this amount in my income at the time of tax filing.
Regards,
Vipin
Hi, I wish to withdraw my PF amount.I have worked for 4 years 11months 20 days…just 11 days less to complete 5years. But to epf account 61 months contribution is credited…so, if I want to withdraw the amount then the tax is applicable to me or not…kindly help me by clearing my doubt..
Dear Sir,
My query is regarding taxability.
I joined the Corporate world in April 2011 and worked with the company till June 2013. My next job materialised only in Oct 2013 and thereon I have worked continuously till now. I had transferred the EPF account from old company to new company.
When do I complete the five years period as I intend becoming an entrepreneur in the coming months.
I have few queries related to PF.
I worked in one orgaization from Oct2011 to Sep-2015.
But, during my tenure My PF contributed to Gurgaon office was from Oct2011 to March 2015 after this due to some organizational level changes in the same company my PF contribution was started from Chennai office i.e from April 2015 to Sep 2105 contribution of my PF was done in new PF account generated in Chennai.
I transferred my amount of Gurgaon PF to chennai PF. In between Chennai office has generated a new UAN number for my PF which is different from my Guraon UAN number.
As the total amount was with chennai PF (including amount transferred from gurgaon) i linked my PF account with new UAN.
Now, after sep 2015 i joined new organization in Punjab, my new PF account is in Punjab which i interlinked with UAN number generated from chennai.
So, please let me know below queries:
1) Two UAN number has been generated on my name ( what should i do in this case). I tried lot of serach on google even tried to write the mails to UAN helpdesk but no response.
2) I need the amount for purchasing home, so shall i transfeerr the amount of chennai PF to my new PF account of Punjab and after 5 years of completion i should go for partial withdrawl so that it will not become taxale
3) How 5 years of service period is counted. is it automatically when we transferr one Pf account to other or we have to take service certificate from conceron PF office.
If i deposit the form 15G to my previous employeer they will not help because of their internal issue of chennai & bawal plant.
Is first UAN number activated? It seems that you have linked UAN number with your Chennai account and
you have already transferred EPF from Gurgaon to Chennai.
1. You theoretically have to close the UAN number of first account but as you tried various options leave it like that for sometime. You can send email to EPFO and keep it as proof.
EPFO would soon come up with cleaning of multiple UAN assigned to same person.
3) 5 years of service period is actually 5 years of contribution to EPFO irrespective of which organization. Oct 2011 – Mar 2015 + Apr 2015 to Sep 2015 + Sep 2015 to current : So your 5 years are done.
When you transfer PF account the time period is noted by EPF so you don’t have to take any certificate.
2. You can partially withdraw from your EPF for purchasing home
From our article EPF Partial Withdrawal or Advance EPF Partial Withdrawal For construction/ purchase of house/ flat
Under Para 68-B of the Scheme
Whose House: self . Property should be in the name of self or spouse or jointly. It should not be a joint property owned by other than the spouse
Eligibility : Should complete 5 Years of service .
How often can one withdraw for same purpose : Only Once for either the construction or purchase of house or repayment of housing loan
Maximum Admissible Amount : 36 times of Wages
Proof/ documents required : Declaration in the Proforma obtained along with application signed by Member
Ask your current employer to submit application on your behalf. If they are ok with it then transfer your Chennai account to Punjab account and then submit withdrawal applciation. That does not require form 15G.
Else you can withdraw from your Chennai account by bypassing the previous employer with new UAN forms. But then till Sep 2015 you would not have completed 5 years so EPF withdrawal will be taxed.
I have withdrawn PF of 37820 for 20 Months, I withdrawn my PG amount thinking that the TDS will be 10% as i submitted my PAN, but the employer has deducted 11896 (34%). IT is EPF.
Guide me here. I have submitted my PAN number. Is there anything i can do to avoid or claim TDS.
Please verify your Form 26AS to see if TDS deducted is showing up. Our article What to Verify in Form 26AS? talks about it in detail.
If your income in financial year is less than 2.5 lakh you can claim TDS deducted by asking for refund while filing ITR.
Please let me know the TDS Deduction of 30% is correct or not . I have the pan card and its mentioned that deduction should be 10%, Is it a mistake from my employer.
It depends on what details were submitted by your employer for withdrawal.
Typically 34% TDS is deducted if there is no PAN number.
Could you verify with your employer?
Ref: Document on TDS from epfo (pdf format)
Wheter epf pension is taxable
All pension including EPF pension is taxable when you receive it it after age of 58 or 50 years in case of early withdrawal.
hi,
I have worked for a company for 12.9 years and plan to change my job. I want to know
1) Can i withdraw my full balance without any tax impact?
2) Can i withdraw only part of the balance without tax?
3) Contributions to EPF have got me tax exemptions under sec 80c, if i withdraw my balance will the tax saved in the past years be taxed? for how many past years i have to pay tax?
4) Is there a way to receive all contributions tax free and is there a amount limit to receive it tax free?
5) I plan to withdraw the money and invest it in equities so that i can buy a house after 1year, is that possible?
As you have worked for more than 5 years your EPF withdrawal is tax free.
1. Yes you can withdraw full balance without any tax impact.
2. You can always withdraw part of balance without any tax. Our article EPF Partial Withdrawal or Advance discusses it in detail.
3. No tax payment , no 80C reversal as you have contributed in EPF for more than 5 years,
4. All amount withdrawn after 5 years is tax free.
5. It is suggested that investment in equity should be for longer time duration at least 3-5 years. So if you withdraw then put money in investments like FD
Please remember that to use power of compounding effectively do not withdraw from EPF unless necessary.
I have served my single company for 4 year and left the job in March2015. PF amount is accumulated during this period. I applied for withdrawal of my PF balance.
Question is:
1. I have left my job and did not intend to take up next job and will be a housewife. Will still the PF I withdrawn is taxable to me and TDS deducted?
2. If it is taxable, it will be treated as income of which year?
The financial year in which it is withdrawn or the year in which I PF deduction was given to me?
3. I don’t have any earning for this financial year. So whether I can claim refund of the TDS deducted?
4. Is there any way that even TDS deduction in my case can be avoided?
Request your input and thanks for so much valuable information you provided so far.
1. PF withdrawn is taxable if contribution to it is less than 5 years.
2. It will be treated as income in the year you get it. The year in which it is withdrawn.
3. Depends on how much is your income and how much is your PF withdrawal amount.
4. You can avoid TDS by filling Form 15G while withdrawing PF. Our article How to Fill Form 15G? How to Fill Form 15H? discusses it in detail.
As mentioned in the article. When the PF amount is withdrawn before five years of continuous service, it is be taxable in the hands of the individual as if the fund was not recognised from the start of the contributions.Provident Fund would be treated as an Unrecognised Fund from the beginning.
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
Plz help in filling the form 15G..
I left my job in sep2015 and now I want to withdraw my PF. What will be the assessment year and the last assessment year to be filled. And if can give a brief description about filling form 15G..
Form 15G & Form 15H have been updated from 1 Oct 2015. Please refer to our article How to Fill Form 15G? How to Fill Form 15H? for help. If you have some questions please let us know.
Nice Article, really impressive.
Can you provide me a detailed information of withdrawal on PF before 5 years with any legal evidence?
I have been terminated by my employer for business reasons after 4 years of sevice. Further I have now compled 55 years age. Please clarify whether PF withdrawal is tax exept, ie., I need not show in my taxable income. Also whether any TDS will be deducted by PF authorities. Incase if it is taxable, can I go for partial withdrawal (90%)
Regards
Hello
I worked for around 4 years in two companies (NSN & Ercisson) and got my EFP transferred while switching to the Ericsson. I applied for EPF withdrawal and when I received it was less than what I expected. The tax cut was around 27%. When I checked with the team managing EPF trust I got the following reply.
“TDS is calculated as below Pattern:
Employee own share : Trust withdraws all the benefit availed by the employee as per form16 available for during the service period and compute the taxable PF amount for each FY and tax accordingly .If form 16 is not available so we deduct tax @ higher rate slab of the current F.Y.
Employer Share + Both Interest : Trust always deduct the tax @ higher rate slab of the current F.Y.”
So they deduct tax @ 10% on employee share & @30% on interest and employer’s share
Please let me know :-
1. is this the correct way of tax calculation
2. Can I claim it back while filling ITR
3. Is the tax deduction rule same for all the trusts managing EPF or can it vary depending on company and trust.
Regards
Arpit
1. These calculations seem stiff.
From Jun 2015 TDS at the rate of 10% is deducted from the EPF withdrawal if Form 15G is not submitted.
2. Yes if you feel more TDS has been deducted please do claim it while filing ITR
3.The PF Trust may frame their own rules and regulations for maintenance of PF accounts but such rules and regulations are supposed to be based on relevant PF rules.
When the PF amount is withdrawn before five years of continuous service, it is be taxable in the hands of the individual as if the fund was not recognised from the start of the contributions.Provident Fund would be treated as an Unrecognised Fund from the beginning.
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.So it should be deducted as Income slab.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
HI ,
I have recently withdrawn my PF.Since my PF money was above the income tax exemption limit and since I have not completed 5 years of service I have not submitted form 15. My PF money got credited in October 2nd week but my form 26AS still (month after PF credit) does not show my EPFO TDS credit . How long does it usually take for EPFO TDS credit to happen and get reflected in form 26AS.
10% TDS has been deducted in my case.
Thanks.
Wait for some more time, maybe a week or two. Because of the festival season there might be a backlog.
If its not there till then you check with EPF
Same with me I got of money in October 2015,till now TDs deducted is not shown in 26as
I worked in company A for 4 years & 2 months after that I was transferred to company B. Company B is also in same Group of Company A but legally different entity.I didn’t transfer the PF of company A to company B. Presently I am working in company B from last 1 year & 4 months. I applied for PF withdrawn for Company A before 2 months. In this way I applied for company A PF withdrawn after more than 5 years. But PF department deducted TDS @ 10% of Total ( Employee Share + Interest + Employer Share + Interest )
How Can I claim it back, as this is a loss for me.
Company A joining Date was March 15, 2010
Company A resigning Date was May 30 2014
Company B joining Date was June 1, 2014
Presently working in Company B
Applied for PF withdrawn of Company A on Sep 2015
Note: I didn’t transfer the PF amount of company A to Company B.
Few quick facts
Theoretically as you are working you cannot withdraw from EPF. To withdraw from EPF one should be unemployed for 2 months.
As you have contributed for less than 5 years to your EPF account hence your EPF withdrawal is taxable.
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
While filing your ITR you should mentioned TDS and You have to see if you owe more tax or not.
I have resigned from my company after 3.5 years of working. I am unable to transfer my EPF balance to new company as they do not pay PF to employee as part of CTC.
Now, if i withdraw amount from PF fund, all amount would be subject to TDS.
What are the options available to me for saving taxes on PF withdrawal.
Please advise.
Dear Sir,
Thanks for such a useful blog.
I have worked with Company A for 4.8 Years and Company B for 2.2 Years and Company C for 2 Years. Now I am associated with Company D for 2 years. I have not transferred any of my previous PF accounts. I have 3 previous PF accounts that I would like to withdraw for my home loan repayment. Since I have not transferred any of my PF accounts and I am not in continuous service of more than 5 years with any of my previous employer, I understand that there will be tax deducted on the withdrawn amount.
Please suggest, If there is a legal way to avoid tax on the withdrawn amount. You have mentioned in one of your post that submitting Form 15G will not attract tax, I understand that 15G is the declaration that your income is below taxable income and hence TDS should not be deducted. My income for this FY is taxable, can I still submit 15G to EPFO to avoid TDS?
Technically you can withdraw as you are still working.
If you withdraw then as your total years of contribution (4.8+2.2+2+2) is 11 years EPF withdrawal is tax free.
You can withdraw from your EPF for paying your home loan.
The PF amount that can be withdrawn is subject to lower of the following thresholds:
-The employee’s basic salary plus dearness allowance for 36 months; or
-Aggregate of employee’s own share of contribution, employer’s share of contribution along with interest earned thereon; or
-The outstanding (principal and interest) home loan amount
Also, the member should have completed 10 years of membership of the fund and her own share of contribution, with interest thereon should be Rs.1,000 or more.
An individual is required to make an application to the regional PF commissioner through her employer along with Form 31 for withdrawal of PF amount. Also, one shall have to obtain a certificate from the specified bank from which the home loan has been availed mentioning the outstanding home loan amount and produce the same before the PF commissioner, if required.
Please note that in such cases, the payment would be directly made to the specified bank.
We would suggest you transfer your PF from company A,B & C to company D and then apply for withdrawal for home loan payment.
I am planning to withdraw PF money with only 3 years of service. I understand that 10% tax on the amount will be TDS. Will there be more tax applicable while filing IT returns as the 80C contribution gets reversed or it is already covered under TDS by EPFO.
thus tax paid will be the 10% TDS and on The employer’s contribution and interest, The employee’s contribution and The interest earned will be again taxable while filing returns. It seems like double taxation.
Please clarify.
EPF withdrawal is taxed if withdrawn before 5 years. EPF withdrawal income comes under different heads
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
Basically tax on EPF withdrawal is as per your income slab.
TDS @10% is minimum that govt takes. So there is no double taxation.
You can claim the TDS deducted while filling ITR
Hi.,
I worked for A Company from 10/01/2010 to 27/09/2011 and then joined Company B on 28/09/2011. I did not transfer the EPF of Company A to Company B. I have resigned recently from Company B and want to withdraw the EPF of both the Companies as I am taking a break.
Can you please guide whether the continuation of service will be counted since I didn’t d not withdraw the PF of Company A or The EPF withrawl of both the Companies will be taxable..
In case I withdraw them in the ne
xt financial year, will I get any tax benefit assuming thatthere will be no income generation in the next financial year.
Ok if you have contributed more than 5 years in EPF,including multiple companies, the amount gets taxable.
As you have not transferred EPFO has no way to know how much is total contribution.
One option is to transfer the EPF of company A to company B and then going for EPF withdrawal. Transfer is faster.
If that doesn’t seem feasible then while applying for EPF withdrawal from each of the company, fill form 15G so that no TDS is deducted.
While filing your tax return you will need to show the epf withdrawal as tax free. Please keep details of your EPF contributions or service.
Now EPF withdrawal is shown as exempt income if one has worked for 5 years so there will be no tax on it whether you are working or not working.
Hi,
Epfo is putting flat 10% TDS ,I have to form 16 from them.I will be able to claim TDS deducted.I did not understand logic of epfo taking and putting it with income tax again income tax paying back.Indian way of things are always complex.
Regards
Sudhakara
Hi Sudhakara,
It’s been a month since my PF money got credited by me , however I have not yet received any TDS certificate from EPFO nor is there any tax credit shown in my form 26AS. From your update looks like you got the TDS certificate, So how long did it take for you to get TDS certificate from EPFO and is your TDS shown in your income tax from 26AS?. Thanks.
No dear still I did not get TDs certificate. It is more 3 months.sent emails no response.
Dear Sir,
I have a query regarding PF withdrawal.
(1) I worked in a company from 2nd May 2006 to 4th July 2007 (1+ year) and the PF money was maintained in their Trust.
(2) I worked in another company from 16th July 2007 to 4th Sep 2015 (8+ yrs) and here too the PF is maintained in their Trust. I transferred my PF balance of Company 1 to Company 2. In this company I was also at Onsite for 6 months from 1st July 2010 to 6th Dec 2010 .
(3) I now joined a new company on 14th Sep where they deduct PF as well.
Now I want to withdraw my PF money since am in dire need of money. Whilst officially I should transfer my balance to Company 3, I dont want to do that but withdraw my money.
(1) Will my PF amount on withdrawl be taxable (In total I have 9+ yrs of contribution to PF.
(2) Since I have to repay a huge housing loan with interest I want to withdraw my PF money now.
If I withdraw will I land up in any I.T isssues next year when I file a return.
Pl advise. Thanks
Q: Do you have UAN ? If yes given by Company 2 or Company 3?
Reason we are asking UAN is that to withdraw one needs to be un employed for 2 months so when you withdraw from account , if working,associated with UAN it can be rejected.
You can withdraw from from Comp1 and Company 2 and as total is more than 9 years the money will not be taxable.
For Company 1 you need to submit for 15G as you worked for less than 5 years. Because of form 15G no TDS will be deducted.
No IT will not create problems, just show money withdrawn as Exempt Income in ITR
Thank You Sir.
I have UAN provided by Company 2.
For Company 1 I need not submit 15G because I have already transferred that accumulated PF amount from Company 1 to Company 2 when I joined Company 2 in 2007.
I have a UAN issued by Company 2 and my UAN is linked to a 22 digit Member ID provided by Company 2.
Hope this will not be an issue when I withdraw PF money from Company 2 (PF contribution) and the EPS money from PF office .
I am a CA and had worked from Nov.2005 to Nov.2006 for one company and later joined another company in Nov.2006 and worked upto Apr.11. I have applied through second employer to get the PF transferred from previous employer. Before Nov.2005, wherever worked, I withdrawn the PF amount but was paid only my contribution. Thus there was a discontiuation to PF from Nov. 1998 to Nov.2005.
After getting out of last employment in Apr. 11, I have set up my own practice. I now would like to withdraw PF amount. In this connection, my queries are:
1) since total contribution period from from Nov.2005 to Apr. 11 was more than 5 years, will I get both the contributions?
2) Upto which period my PF balance would have earned interest since Apr.11 as no contributions thereafter?
3) What are the forms to be submitted to withdraw both the contributions as I am now self-employed since Apr. 2011.
Thank you sir. Request you to please clarify on the above.
1. You should get both contributions, the employer and employee. Or do you mean EPF and EPS as employer’s contribution major goes towards EPS.
2. For three years since Apr 11
3. Forms for withdrawal are : Final Settlement through Form 19 and Withdrawal benefit from EPS through Form 10C.
You can download the forms from EPF website to download EPF Withdrawal Form 19
1) i did job 2008 to 2015 in a company now i changed the job No i want to withdrwl my PF amount? What will be the tax treatment.
2) For Tax Treatment, They Count 5 years of Completed job or Completed of 5Years of subscription Amount?
1. Theoretically you need to be unemployed for 2 months before you can withdraw the EPF. With UAN the EPFO can easily find out if you are working or not. Earlier it was not possible for EPFO to track.
2. If EPF withdrawal is allowed then it would be tax free as its 5 years of subscription to EPF irrespective of one job, multiple jobs, jobs with breaks and you have 7 years
I have less than 5 years of service. However I have mentioned personal reason in my resignation, I am unable to work due to medical reason. I have hospital card and estimate of expense for the surgery planned after 6 months.
I need to withdraw my PF. What form/document I need to attach to get my PF taxfree?
Thanks,
Akhilesh
Sad to hear about it.
Usually TDS is not be applicable in case of termination of service due to ill health of member,
Check with your employer , and to be on safe side SUbmit Form 15G.
Our article
EPF Withdrawal before 5 years,TDS,Form 15G,Tax and ITR covers the topic in detail
Dear Sir,
I worked at TCS for 4.5 Years and resigned at October 2014 and currently being an entrepreneur, not taking any salary so far. Thinking to withdraw my PF for my expenses.
Would it be taxable? If yes what might be the percentage. Do I need to submit any forms for not having any income? Please advise. Thanks in advance.
Our article
EPF Withdrawal before 5 years,TDS,Form 15G,Tax and ITR covers the topic in detail covers it in detail
Hi,
I have joined a company X on 1st Oct 2010 & left it on 10th Sep 2012. Then I joined a company Y on 17th Sep 2012 (i.e. after a gap of 1 week) and now leaving the same on 5-Oct-2015. I have linked both EPF accounts and also got the earlier one transferred in new one. (TOTAL PERIOD @ X +Y = 5 years) … Will my EPF withdrawal be taxed?
Hi, I worked at TCS for 4.5 Years and resigned at October 2014 and currently being an entrepreneur, not taking any salary so far. Thinking to withdraw my PF for my expenses.
Would it be taxable? If yes what might be the percentage. Do I need to submit any forms for not having any income? Please advise. Thanks in advance.
Hi, I have withdrawn EPF after 2 years of service. So according to this article I have to revise ITR for all the years that I have had PF. How does one revise and refile ITR for previous years?
No you have to reverse the benefits of EPF in the Assessment Year in which you got the money.
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
Dear Sir,
i was deputed in India Today Group on the roll of Man Power from Jan 2011 but due to contract expiry(in Apr 2014) with that company I was shifted on the roll of Adecco from May 2014. I applied to transfer my pf but after one year it was not transferred so I decide to withdraw my PF(amount approx. 75000 or more & tenure 3 years 3 months). I applied to withdraw my pf on May 2015 & got credit in my account. I even submitted form 15G & Pancard.
Now i want to some questions:
1. Whether EPFO deducted tax or not.
2. If deducted how I can claim it back?
3. in which financial year I will claim this as we got credit it in 2015-16.
Regards
Sunil Shukla
1. Whether EPFO deducted tax or not : Please check your form 26AS of the year in which EPF withdrawal happened. It would either show TDS by EPF or whether TDS was not deducted under 15G.
2. EPF withdrawal is taxable before 3 years. tax breakup given below
3. FY is the year in which you got your money, which is your case is 2015-16.
Tax on EPF withdrawal
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
Dear Kirti Sir,
I worked at TCS for 4.5 Years and resigned at October 2014 and currently being an entrepreneur, not taking any salary so far. Thinking to withdraw my PF for my expenses.
Would it be taxable? If yes what might be the percentage. Do I need to submit any forms for not having any income? Please advise. Thanks in advance.
I withdrew my PF amount from my previous employment and it got credited to me in FY 2014-15 after the deducting the TDS. Now I want to file the tax return. Should I be mentioning the amount I received, again, under “Other income” / add to “Income under salary” when filing ITR? On which form do i need to file?
Please help !
If PF is withdrawal less than 5 years then as mentioned earlier it would be taxed as given below.
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
So you have to break your withdrawal into above sections and fill ITR form. Since Salary Income, Income from other sources are in all forms you can choose any ITR based on other types of income.
You would also have to show TDS deducted in TDS section
Dear Sir/Madam,
Thanks for the reply.
I have received the TDS certificate & Form No. 16 from the “Employer Provident Fund Trust”. As per the Form 16 issued, they have mentioned the total PF withdrawal amount (Rs.1,23,920/-) under “Salary as per provisions contained in section 17(1)” and deducted the TDS at 20% (Rs.25528/-). Also they have issued the TDS certificate and same TDS details are auto filled in the Schedule I in the TDS column of ITR 1.
Now my question is that, Should I be mentioning the amount I received under add to “Income under salary” or “Other income” when filing ITR as they have issued the Form 16? Or do I need to follow any other ways to file the return.
Please note that, I don’t have any other source of income like house property, profession. Suggest me the suitable form.
Please advice.
Thanks & Regards,
Naveen S D
Hi, I worked at TCS for 4.5 Years and resigned at October 2014 and currently being an entrepreneur, not taking any salary so far. Thinking to withdraw my PF for my expenses. Would it be taxable?if yes what might be the percentage. Do I need to submit any forms for not having any income? Please advise. Thanks in advance.
Hi, Kindly suggest me what is the best solution in my case. I am having a ten months old EPF account in my current job and this is the only EPF account I have so far in my job life of four years as earlier I was working as an entrepreneur.
Currently I am moving outside India for four years of higher study and leaving my current job and will not receieving any income to maintain any contribution to EPF account. As in my case it is sure that my account will become dormant after 3 yaers of inactivity. Kindly guide me what will be best option for me- whether to withdraw from EPF or wait for my another job after four years to transfer my EPF account from one employer to another.
Thanks,
Wow an entrepreneur and going for higher studies. Best of luck
Regarding withdrawl You would have to make the call.
If you leave money in EPF account it would earn interest at rate of around 8% for 3 years and then become dormant.
If you withdraw now you would have to pay tax on EPF withdrawal.
Things might change in 4 years. If you need money and are ok to pay tax on it then you can go for withdrawal.
Hi, Kindly suggest me what is the best solution in my case. I am having a 1 year old EPF account in my current job and this is the only EPF account I have so far in my job life in India. I was previously employed outside India.
Currently I am moving outside India again & may not be working for a year at least. I am leaving my current job and will not receiving any income to maintain any contribution to EPF account. As in my case it is sure that my account will become dormant after 3 years of inactivity.
Ideally I would like to withdraw for FY 2016-17 as I would be under minimum taxable income.
* If I apply for a PF withdrawal through my company in Feb 1st will it be considered for FY 2015-16 or 2016-17?
* How long does the process take for the PF withdrawal?
* Since I will be moving out of the company & country very soon, how easy is the process to follow up with my company to defer the PF withdrawal documents to April?
Kindly guide me what will be best option for me- whether to withdraw from EPF or wait for my 2 months so the unemployment kicks in.
Congratulations.
You can only withdraw if you are un employed.
If yoy would be under minimum tax limit in FY 2016-17 and want to withdraw then you have to submit withdrawal request after 1 Apr 2016.
1. If I apply for a PF withdrawal through my company in Feb 1st will it be considered for FY 2015-16 or 2016-17?
FY 2015-16.
2. How long does the process take for the PF withdrawal?
Around a month
3. Not difficult but you have to submit the application. Your company can forward request after 1 Apr. Or your friend/colleague can do it on your behalf if your company is OK
Else if you don’t need money, let it earn interest and claim it when you come back for holidays if possible
As you have contributed to EPF only for 1 year your EPF withdrawal will be taxable. And if you withdraw in FY 2016-17 you would save tax.
Please fill Form 15G for TDS not to be deducted.
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
I worked for 3.5 years and resigned on 7-4-2015 before completion of 5 years .I have decided not to work . I make an application in the financial year 2015 when I have no other income .My PF amount is likely to be less than Rs.2 Lakh
I would like to know whether PF withdrawal amount would be taxable in the year 2015 despite no income .
Yes PF withdrawal will be taxable if the contribution to it is less than 5 years irrespective of which year you get.
TDS will be deducted at the rate of 10%.
If your income is less than exemption limit you can claim for refund by filing ITR
I worked for a company for 3 years from Feb 2012 – April 2015.I resigned and moved out of India.I am not employed currently.Since it is less than 5 years of service I was said that there will be a TDS deduction if I do PF withdrawal.
I read in an article that “TDS will not be applicable in case of “termination of service due to ill health of member, discontinuation / contraction of business by employer or other cause beyond the control of the member,”
Will this clause be applicable for me if I furnish any letter or can I keep the PF account without closing? can I leave it as is and let the account go dormant and withdraw next year as i will be below taxable slab and tds can be got as refund.Please advice! Thanks!
Hi, I wish to withdraw my EPF. I joined a X company in 27-07-2009 and left the company in 04-02-2014.
I am withdrawing the EPF and have applied but rejected. See the status from epfo services site. Who to contact for the EPF withdrawal. Employer or EPF office. If EPF office, how do i know the exact EPF office in Bangalore as there are many offices.
STATUS for Member ID: BGBNG00249600000041067
Claim ID : BGBNG150500022623
Status : Claim Form 19 for PF Settlement AGAINST Member Account No (BGBNG00249600000041067) has been rejected. Rejection letter is under dispatch/ dispatched to address in your claim form.
Reason of rejection: The reason of rejection is not available in database. You may please contact RO/SRO BANGALORE for further details
Claim ID : BGBNG150500022625
Status : Claim Form 10C for Withdrawal Benefit AGAINST Member Account No (BGBNG00249600000041067) has been rejected. Rejection letter is under dispatch/ dispatched to address in your claim.
Claim ID : BGBNG150700005924
Status : Claim Form 10C for Withdrawal Benefit AGAINST Member Account No (BGBNG00249600000041067) has been rejected. Rejection letter is under dispatch/ dispatched to address in your claim.
Claim ID : BGBNG150700005919
Status : Claim Form 19 for PF Settlement AGAINST Member Account No (BGBNG00249600000041067) has been rejected. Rejection letter is under dispatch/ dispatched to address in your claim form.
Reason of rejection: The reason of rejection is not available in database. You may please contact RO/SRO BANGALORE for further details
And also want to know is the EPF withdrawal taxable as the service is less than 5 years, but withdrawing after 6 years.
And also there was termination from employer from employment immediately without prior notice due to reorganization. As per below exempt from tax point, can i reclaim the tax/TDS if my EPF withdrawal is taxed.
To reclaim the tax/TDS EPF withdrawal deduction, what documents to submit and how and where to submit.
And as i have joined a new employer and have not transferred the EPF amount, and have created a new EPF account here, is there any option now to transfer to new employer account.
If the employee has not rendered continuous service of five years, but the service is terminated by reason of the employee’s ill health or discontinuance of the employer’s business or reasons beyond the control of the employee, the amount will be tax-exempt.
This helps me a lot. Thanks in advance.
Why the EPF withdrawal gets rejected is difficult to know.
Yes EPF withdrawal is taxed if service (total) is less than 5 years.
After how many years you withdraw affects how much interest EPF account earns. For 3 years after you stop contributing EPF earns interest after that it stops earning interest.
As you rightly said, it is easy to transfer the old EPF account to your new account.
We assume you now have UAN number so you can link your old EPF account to the UAN number and proceed on transferring the EPF account.
Yes if EPF members service has been terminated due to his ill health, contraction or discontinuance of business of employer or other cause beyond the control of the member shall not be required to submit PAN, Form No. 15G/15H along with Form No. 19. In such cases, no income tax (TDS) shall be deducted as per Rule 8 of Fourth Schedule to the Income Tax Act, 1961.
>>> Yes if EPF members service has been terminated due to his ill health, contraction or discontinuance of business of employer or other cause beyond the control of the member shall not be required to submit PAN, Form No. 15G/15H along with Form No. 19. In such cases, no income tax (TDS) shall be deducted as per Rule 8 of Fourth Schedule to the Income Tax Act, 1961.
After 4.5 years of total service, my company asked us to leave gracefully because they were shutting down. But even after all the employees were relieved, company is still open on paper. No employee except owner, no office location, but company exists on paper.
Its been more then 6 months now. After that job I am at home, self employed. In this case, will I get tax exemptions?
> In such cases, no income tax (TDS) shall be deducted as per Rule 8 of Fourth Schedule to the Income Tax Act, 1961.
So I guess you are saying EPFO will not do a TDS and pay your PF amount back to you.
I have a similar problem:
My company has closed and all Employees have put in EPFO Withdrawl papers.
EPFO dept has cleared out the Employee Share, no TDS was cut.
Q1: Does one have to show this as income in Tax Returns? and pay tax on the same if withdrawing before 5 years (even if company has closed).
Q2: And what about ER Share. This has been held by EPFO department.
Does any body have any similar experience, If so Share.
After completion of 60 years I retired from my service. I took up another job on 2 years contract where that company was deducting PF. Due to my health problem I shortclosed my contract after completion of 18 months of service. Whether my accumulated PF amount attracts income tax as income from other sources.Expecting an early reply Thanks. Somanath
Hi,
My PF account from previous employer and current employer are linked to the same UAN. Now i want to withdraw the amount from old pf account.
Q. Is the 30,000 limit for TDS exemption includes the pension contribution amount also, or it is only applicable for the PF amount. (Case :PF amount is 25000 excluding pension contribution (around 10000) and service is less than 5 years)
In the above case, what documents should i provide to exempt TDS amount.
I worked in a company from dec 2009 to june 2012.I left my job after that to pursue higher studies.
I withdrew my EPF in Jun 2013 while I was still a student.
I believe the amount deposited in my account was after a deduction of mandatory tax at source.
Since my only income was from EPF withdrawal for FY13-14 and hence below the taxable limit. Can I ask for a refund for this amount, TDS ?
I wish I had read this post earlier, before applying for PF withdrawal.
I quit my job after 4 years, and since I am leaving for further study, I decided to request for PF withdrawal with my employer. Now after reading the post I realize I could’ve left the account dormant and then once I joined a new job after 2 years, I could’ve transferred.
Now I suppose cancellation of PF withdrawal is not possible (if it is then please let me know how to do the same), how can I claim refund in the next year’s ITR? I am out of job for another 2 years atleast so the only “income” I shall be receiving is the PF withdrawal amount. What do you suggest? Also, could you clarify who will provide me with Form 16 in this case?
Hi. I started working in Company A on 19th June 2007 till 5th June 2010, then joined company B on 7th June 2010. I transferred my PF from Company A to Company B. I left Company B in Nov 2011 and Joined Company C in Dec 2011. Transferred my PF again from Company B to Company C. I left Company C in May 2014. Now When i withdrew my PF, Company C only considered the service period of Company B & C ie 4 years hence they deducted TDS on my PF withdrawal. But I have rendered continuous service in three companies for 7 years. Am i eligible to claim the income tax refund against the TDS deducted from my PF. Please Help.
Yes you can. you have the proofs right that amount was transferred.
I have withdrawn my PF before 5 years. If I deposit that amount in VPF, will it be tax exempted?
Sir No.
In EPF, an employee has to contribute 12% of his basic pay towards his provident fund account. An equal amount is contributed by his employer. Apart from contributing the normal 12% of his basic pay, employee may choose to put in contribute more than this, voluntarily he can do so at any rate he desires upto 100% of basic and D.A.
Hi,
Lets say i was worked in a company X for 5 Years (2009 – 2014 october). I quit the company and joined in another company Y in Nov 2014 to till date. I received PF, Pension, gratuity as a part of arrears from my old company X in the same year 2014. When i try to file my IT returns there is a question under Relief_89 section as “Did i received any portion of salary (including pension and gratuity) pertaining to earlier years in financial year 2014-15?” When i say yes it asks me total tax relief.
Can someone help me to calculate my tax relief with examples?
As you worked for more than 5 years your EPF and Pension is tax free. You can show them in Exempt Income
Gratuity amount calculation includes taxable as well as exempt amount.
Any gratuity received is tax exempted to the extent of least of the following:
Statutory limit of Rs 10 lakh. (Maximum limit / Govt notified amount)
Last drawn salary * 15/26 * No. of completed years of service.(Refer FAQ 6 )
Actual Gratuity received by you.
Taxable Gratuity received by you on your retirement (or) during your service period is taxable under the head “Salary.”
What is the amount of gratuity mentioned in Form 16? If you could share with us at bemoneyaware@gmail.com we shall try to find the ans
Sir,
If one has worked in Company A with ACCT No X for 2 yrs, and then later PF transferred to comp B with Acct Y where he working for 4 yrs, is he eligible to withdraw while changing the company B without paying tax?.
I ask this because the acct numbers are not same in company A and B?.
Yes as total number of years of EPF contribution is more than 5 years withdrawal from EPF would become tax free.
But if you are still working EPF withdrawal would not be allowed.
We recommend transferring EPF from old account to new account and earn interest on it.
Account numbers would be different as companies are different. We explained this in our article FAQ on UAN number and Change of Job
Hello,
This was a very informative site regarding PF.
I need one information: I withdrew my PF amount from my previous employment and it got credited to me in FY2014-15. I also received the TDS certificate for the same. My questions are:
1. On what amount is the TDS actually done? Entire amount i.e employee’s contribution + employer’s contribution + respective interests? or only on employer’s contribution, etc…?
2. Should I be mentioning the amount I received, AGAIN, under “Other income” / add to “Income under salary” when filing ITR?
OR
Should I be mentioning any of the withdrawn PF amount again during ITR?
I have searched to find these info but in vain. Please Help!
Tax on PF can be broken into three parts:
1. Total contribution by the employer plus interest (not taxed earlier) will be taxed under the head ‘profits in lieu of salary’.
2. You will be taxed on the amount of tax benefit claimed for your contribution of EPF.
3. Interest received on your own contribution to EPF will be taxed as ‘income from other sources’.
Thanks a lot for the quick reply!
I have further questions:
1. So the TDS done by my previous employer contains which all components?
In the given Form-16 I see there are only 2 entries:
– Salary as per provision contained in sec.17 (1)
– Interest on Member’s contribution
Does this mean, that the tax calculated is NOT on the entire amount I withdrew?
2. What amount must I mention in the ITR now?
Sir if you give exact details on
EPF amount withdrawan
Entries in Form 16
we can discuss it with our CA and get back to you.
we don’t have exact data to work on hence don’t know how to give exact numbers.
If you have found and can share with readers we would appreciate it and so many others too.
Hi, I worked in a company A for 3 years 5 months and in current company, 6 months. Company A has standard EPF while B is maintaining through a trust. My PF transfer claim is rejected. Reason for rejection is not specified. Now what should I do? If I cannot transfer, can I withdraw old PF balance after completing 5 years of total service? Please reply.
Thank you.
Sorry to hear about you not being able to transfer money.
Can you check with company A as to why it was rejected?
How did you apply- online or offline by submitting forms.
You can RTI route also to ask the questions as to why your claim was rejected.
Hi,
I have withdrawn my PF amount this year after a Job switch. Even after submitting the PAN Copy, TDS of ~34% has been deducted from the withdrawal amount. My Income for this FY, doesn’t fall in 30% slab. Is there a way, I can claim the refund of additional Tax that has been deducted..? And also please guide me the way to do it.
Vamshi TDS does not mean tax payable.
If withdrawal happened before 1 June 2015 then TDS as per your income slab would be deducted.
If you got your withdrawal amount after 1 Apr 2015 it would have to be accounted in Income tax return of next year that is FY 2015-16 or AY 2016-17.
For return for this year you have to account only for income earned between 1 Apr 2014 to 31 Mar 2015.
Income from EPF withdrawal will be added in different categories and then if some total of income is less than exemption limit or more Tax has been deducted you can ask for refund.
Thanks for the response. Yes, withdrawal happened in between “1 Apr 2014 to 31 Mar 2015” (received the amount in Jan 2015). While filing the ITR, should I show the EPF amount under “Income from Other Sources”, and claim a return..?
I had 3 PF accounts. I had applied for PF transfer from Account A and B to be transferred to Account C. The Employer and Employee contribution has been successfully transferred after a period of 5 years struggle.
Now, the Pension Amount of Rs.541/- that was deducted every month in Account A and B has not been transferred to Account C. How will the same be accumulated from each account and paid when i turn 60 years ? Pls guide.
Sad to hear about the struggle that you had to go through to get your own money.
If your total years of contribution is less than 9.5 years you can withdraw EPF or get scheme certificate. After 9.5 years you can only get EPS.
To withdraw or get scheme certificate please submit Form 10C which you can download from here .
Please submit one to your old employer A and other on to old employer B.
If you don’t get any response within a month you can think of going for RTI.
To understand how EPS works we recommend you read our article Understanding Employee Pension Scheme or EPS
I WORKED IN COMPANY FROM MARCH 2011 TO FEB 2015 (4 YRS.) NOW I WANT TO WITHDRAW MY PF SO PLEASE TELL ME HOW TO SAVE MY TDS DEDUCTION ON PF BALANCE. ITS MORE THAN 30,000 /-
Sir it would not be possible to save TDS as govt will deduct the TDS and then give your the remaining amount.
TDS is not deducted if number of years for EPF contribution is more than 5 years.
So if you are working now, get your EPF transferred to your new account.
But if you have UAN number and linked to EPF then your withdrawal request might be rejected as you need to be unemployed for 2 months before asking for withdrawal.
Another fact that we would like to bring your attention is that if you withdraw before 5 years then entire EPF amount is taxable as per your income slabs.
If TDS is deducted and your income for FY 2015-16 i.e year of withdrawal is less than exemption limit i.e 2.5 lakh you can file ITR and claim the TDS deducted as refund.
So what are you going to do?
I worked in a company from March 2011 – Apr 2015 (4 years). If I wanted to withdraw my PF, I knew I will have to pay tax on the withdrawal amount.
Currently I am working as freelancer. Still it is taxed if I withdraw the amount?
What if I leave the PF for another 3 years (means until April 2018), (becomes dormant) and withdraw PF then? Still it is taxable?
When I submit my PAN, will the TDS be 10% or the total PF amount will be added to my current income and taxed based on current tax slabs?
Thanks in advance for the reply.
So Sir you have worked for 4 years and yes if you withdraw your PF you will have to pay tax on withdrawal amount.
Technically since you are not unemployed you cannot withdraw but then EPFO has no way of knowing whether you are working or not so you can withdraw.
5 years is calculated as 5 years of contribution to EPFO account. So even if you withdraw after 3 years i,e Apr 2018 your years of contribution to EPF will be less than 5 years and withdrawal will be taxable. But till 3 years your account will earn interest.
TDS is not related to amount that is taxed. If you submit your PAN TDS will be 10% but it would be taxed as per your current tax slab.
Thanks for giving us opportunity to help you clarify your doubts.
Another point we would like to say if you have plans of joining an organization which will have EPF in next 3 years from last contribution to EPF , Apr 2018, in your case you can leave your money in EPF and it would earn interest. When you join you can transfer your EPF of old organization to new organization
Dear Admin,
I really appreciate for spending time and replying all our queries. I find it really helpful.
May be now a days lot of IT people doing in my way (as a Free Lancer)
Though I don’t have immediate requirement for money, I wish I can withdraw my PF and repay my home loan.
Otherwise, Can I merge my EPF account with something like SBI pension plan or can I contribute myself as individual to my EPF account?
What is the better advise here?
You can withdraw EPF if you are not working as employee for 2 months. If you have worked for 5 years epf withdrawal will be tax free.
You can use it any way you want.
You cannot merge EPF with SBI pension plan or anything for that matter.
Remember EPF is for retirement so you need to plan for retirement – you can have a PPF/Atal Pension Yojna or invest in equity funds as per your risk profile.
Sir,
Thanks for your posts, it is helpful.
I have a question in which you said that effective from June 1 2015, the TDS on PF withdrawal before 5 yrs of continuous service is at 10%. But I am already at 20 % tax slab with only 2.5 yrs of service. So will it be at 10% or at my slab rate of 20% on withdrawal now in July. The last PF contribution was only in January 2015.
This will help me immensely in taking a decision.
Thanks
Vasanthraj.C
Good question Sir.
Amount of TDS deducted is different from how much tax you have to pay. Tax on Fixed Deposit, EPF Withdrawal is as per your income slab though tax deducted is at 10%. On EPF Withdrawal tax is deducted if total years of EPF contribution is less than 5 years.
If you have worked in various organizations and have contributed to EPF then years of contribution in EPF is sum of years of contribution in each of the organization.
Another point we would like to say if you have plans of joining an organization which will have EPF in next 3 years from last contribution to EPF , Jan 2018, in your case you can leave your money in EPF and it would earn interest. When you join you can transfer your EPF of old organization to new organization
Hello team,
Could you please help me to understand below queries on PF withdrawal.
1. Could you please clarify me about “5 years of service” .Is this 5 years of time period between joining date and relieving date in a company or Total PF account membership ?
2. I have worked 4 Years 3 months in a company (Joined on June 28th 2010 and relieved on 13th Oct 2014). On June 28th 2015 i am going to complete 5 years on that PF account membership and planning to submit my PF withdrawal forms in July 2015. Will this come under less than 5 years tax deduction or any other tax deduction category ?
5 years of time period Total PF account contribution which is typically the date of joining and leaving organization.
You will have contributed for less than 5 years hence EPF withdrawal is taxable as per your income slab.
If you have worked in various organizations and have contributed to EPF then years of contribution in EPF is sum of years of contribution in each of the organization.
Another point we would like to say if you have plans of joining an organization which will have EPF in next 3 years from last contribution to EPF , Oct 2017, in your case you can leave your money in EPF and it would earn interest. When you join you can transfer your EPF of old organization to new organization
IF dormant account holder will apply for withdrawl is he liable for tds.
Yes Sir. Income tax department will take it’s cut when the dormant account is made active
i was left the job on 31 january 2011 but yet not withdrawl my pf and not doing the job in any other establishment.
1)If i will go for withdrawl my pf now what will be the condition of t.d.s.deduction.
2) If i will go for withdrawl my PF after 01 february 2016 ( After 5 years withdrawl)what will be the condition of t.d.s.deduction.
Kindly tell me on my id please.
Thanks team.
As last contribution was in Jan 2011 your account has become dormant. Your EPF account has stopped earning interest from Jan 2014.
Unless you plan to join in near future the job you should claim your EPF account TDS or not TDS.
5 years is calculated as 5 years of contribution to EPFO account so were you in job and contributing in EPF for 5 years. if your years of contribution to EPF will be less than 5 years then withdrawal will be taxable.
If you submit your PAN TDS will be at the rate of 10% though tax would be as per your income slab in the year of withdrawal.
Sorry we don’t replay on personal ids.
Resp Team,
I am left the my job on 31st January 2011 & not doing the job on any other place.If i will try to withdrawl my EPF & EPS after 31st January 2016.( Withdrawl after 5 years.
Please tell me that – amount of tds wil be deducted from my account, if yes what is the percentage of TDS?
Hello Kirti, I have a question related to withdrawal from EPF, but not its taxation. My PF membership is more than 7 years, and I want to withdraw 50% of my (employee) share “for marriage of self”. But here’s the thing, I got married last year in 2014, so am I allowed to withdraw showing that as the reason in 2015? From what I could gather, a marriage invitation card needs to provided along with the declaration & application, not absolutely sure though. Appreciate if you could shed some light on this.
Been a subscriber of this blog for a long time and must say that the in-depth articles are very useful.
Regards.
Not sure about it but you can still try claiming for your marriage expenses. You can apply by filling Form 31 through your employer. If they accept well and good you get your money, if they don’t well..you tried.
Not sure about it but you can still try claiming for your marriage expenses. You can apply by filling Form 31 through your employer. If they accept well and good you get your money, if they don’t well..you tried.
Thanks for encouraging words.
Dear All,
Just mail us at garglokesh92@yahoo.in all your queries regarding Taxes and Business Laws.
Regarding PF and you may avail our services e.g. ITR filing and get your tax planning to reduced or avoud tax
E Consultants Team !
Hi,
I left my job last year on 19-03-2015 after 7yrs 8months.
Have withdrawn my PF as I was trying to get a job in US.
I traveled to US and came back within a month. After that I did not get a job in India and did not receive any salary for the financial year 2015-16.
However, my EPF and EPS withdrawals along with Gratuity have all been processed after 1st April 2015. Which means I got all the benefits only in the financial year 2015-16.
With a lot of confusion, I missed the deadline by 30th April to file my IT returns.
Kindly guide me how to file my returns, if possible step by step, showing what to show in each column and if I am exempt from tax.
Also I wish to mention that i have a home loan for which I am paying the EMIs and loss of income from house property to the extent of Interest on Home loan minus (Rental income – maintenance and repairs cost) is still a negative figure. So it is a loss on income from house property.
So, kindly guide me with these points as major consideration.
Thanks
Bindu
But
Dear All,
Just mail us at garglokesh92@yahoo.in all your queries regarding Taxes and Business Laws.
Regarding PF and you may avail our services e.g. ITR filing and get your tax planning to reduced or avoud tax
E Consultants Team !
Hello Maam,
Last date for filling returns of FY 20150-16 is 31 Aug 2015. Why are you mentioning last date as 30 Apr 2015?
Maam you can contact a CA or use free e-filing site. Without knowing what kind of income you have it is difficult to tell ITR you are using.
Our article How To Fill Salary Details in ITR2, ITR1 explains the process in detail.
I am joined in a company in 2010,pf deducted from the date 21-05-2010 and i am resigned now and date of resignation is 31-03-2015.Now i am claiming my pf amount ,please tell me tds will be deduct or not.I am waiting for your reply.Help me
Is this the only company you have worked for?
Tax on EPF withdrawal contributions to EPF of previous employee is also counted.
If your last date of contribution is also Mar 2015 and this is your only job then TDS will be deducted.
In case, the employee withdraws his/her EPF amount which is more than or equal to Rs.30, 000 with service of less than 5 Yrs.
1) TDS will be deducted @ 10%, if an employee submits the PAN Card (But Form 15G/15H not submitted).
2) TDS will be deducted @ 34.608% if an employee fails to submit the PAN Card. (Also Form 15G/15H not submitted).
Dear Sir,
I made a PF withdraw application in my previous company on 15/04/2015 now they submitted my form on 22/05/2015 and my total contributing years are less then five & amount is more then 30000 & i also did not provide any PAN card copy along with Form so kindly suggest me there will be deduction of TDS or not & if yes then how much?
Regards, Virpal
From Jun 1 2015, EPF withdrawal law has changed so now if the employee withdraws his/her EPF amount which is more than or equal to Rs.30, 000 with service of less than 5 Yrs.
1) TDS will be deducted @ 10%, if an employee submits the PAN Card (But Form 15G/15H not submitted).
2) TDS will be deducted @ 34.608% if an employee fails to submit the PAN Card. (Also Form 15G/15H not submitted).
Hi,
I worked in a company for 3.2 years till December 2014, and than change the job. I withdraw the my PF amount in April 2014(Rs. 76,000).
Is Employer Pension Share (typically Rs. 541 per month) is taxable, as I want to pay the tax on the PF amount.
Thanks!
EPS part is not taxable as govt. does not pay interest on it. After Oct 2014 amount deducted should be 1250.
You would get scheme certificate which on retirement you would have to submit to EPFO office to get pension.
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
Hi,
I worked in a company for 3.2 years till December 2014, and than change the job. I withdraw the my PF amount in April 2014(Rs. 76,000).
Is Employer Pension Share (typically Rs. 541 per month) is taxable, as I want to pay the tax on the PF amount.
Thanks!
EPS part is not taxable as govt. does not pay interest on it. After Oct 2014 amount deducted should be 1250.
You would get scheme certificate which on retirement you would have to submit to EPFO office to get pension.
The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
Dear All,
Just mail us at garglokesh92@yahoo.in all your queries regarding Taxes and Business Laws.
Regarding PF and you may avail our services e.g. ITR filing and get your tax planning to reduced or avoud tax
E Consultants Team !
Dear team, it is good narrative information abt EPF withdrawl. I had one question. If I withdraw PF before 5 yrs then The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
So, it means the employee contribution to the extent 80C benefit claimed will be shown as ” Income from other sources”. ?
Further, how to get the bifurcation of the amounts as we only got the final amount credited to bank account without any breakup??
How about taxation of pension withdrawl before 5 yrs as some portion is returned as pension amount??
Thanks
Amit
Amit a very valid point.
If you have UAN epassbook you can get details from it.
Else check your form 16.
There is no taxation on pension withdrawal before 5 years as no interest is paid on it.
Payment on termination will include four components, viz, employee’s contribution and interest thereon and employer’s contribution and interest thereon. The tax treatment of such payments is as follows :
Employee’s contribution to the extent 80C benefit claimed will be shown as Income from other sources ?; interest thereon is taxed under the head ‘Income from other sources’.
Employer’s contribution as well as interest thereon will be taxable as salary income. However, relief under Section 89 will be available.
Dear team, it is good narrative information abt EPF withdrawl. I had one question. If I withdraw PF before 5 yrs then The employer’s contribution and interest, thereon, would be fully taxable as as profits in lieu of salary or ‘salary income’ in the hands of the individual.
The employee’s contribution would be taxable to the extent of deduction claimed under Section 80C, if any, under the Income-tax Act,1961 and
The interest earned on employee’s total contributions would be taxable as ‘income from other sources’ in the hands of the employee.
So, it means the employee contribution to the extent 80C benefit claimed will be shown as ” Income from other sources”. ?
Further, how to get the bifurcation of the amounts as we only got the final amount credited to bank account without any breakup??
How about taxation of pension withdrawl before 5 yrs as some portion is returned as pension amount??
Thanks
Amit
Amit a very valid point.
If you have UAN epassbook you can get details from it.
Else check your form 16.
There is no taxation on pension withdrawal before 5 years as no interest is paid on it.
Payment on termination will include four components, viz, employee’s contribution and interest thereon and employer’s contribution and interest thereon. The tax treatment of such payments is as follows :
Employee’s contribution to the extent 80C benefit claimed will be shown as Income from other sources ?; interest thereon is taxed under the head ‘Income from other sources’.
Employer’s contribution as well as interest thereon will be taxable as salary income. However, relief under Section 89 will be available.
Hey , just wanted to reconfirm, my of account is less than 5 years old, I have moved out of India and hence my income in India is zero .
If I withdraw now, can I claim refund of the tds deducted during withdrawal.
I heard that I will have to pay tax even if my income is zero in the current FY , hence reconfirming
Yes Maam you are right.
As your contribution to EPF is less than 5 years if you withdraw you will have to pay tax. TDS will be deducted.
TDS and income tax are two different sides of the same coin.
There is no provision in EPF that you can avoid TDS. Unless you don’t want to withdraw.
As your income in India is zero to claim TDS you would have to file income tax return and ask for refund.
If you don’t withdraw then EPF account will earn interest for 3 years and would then become dormant. I hope you have the UAN number .
Hey , just wanted to reconfirm, my of account is less than 5 years old, I have moved out of India and hence my income in India is zero .
If I withdraw now, can I claim refund of the tds deducted during withdrawal.
I heard that I will have to pay tax even if my income is zero in the current FY , hence reconfirming
Yes Maam you are right.
As your contribution to EPF is less than 5 years if you withdraw you will have to pay tax. TDS will be deducted.
TDS and income tax are two different sides of the same coin.
There is no provision in EPF that you can avoid TDS. Unless you don’t want to withdraw.
As your income in India is zero to claim TDS you would have to file income tax return and ask for refund.
If you don’t withdraw then EPF account will earn interest for 3 years and would then become dormant. I hope you have the UAN number .
If I resign X company before 5 years, so can i move my pf account to personal pf account. if i do not debit in personal pf account, then those all years will calculate in 5 years.
Suppose i join X company in 2013 and i resign on 2015 so can i move pf account to personal pf account. if yes, if i do not debit money in this personal pf account till 2018, can i withdraw pf amount after 2018 without any tax.
If I resign X company before 5 years, so can i move my pf account to personal pf account. if i do not debit in personal pf account, then those all years will calculate in 5 years.
Suppose i join X company in 2013 and i resign on 2015 so can i move pf account to personal pf account. if yes, if i do not debit money in this personal pf account till 2018, can i withdraw pf amount after 2018 without any tax.
Dear Sir,
My EPF started in August 2008 and continued till Dec 2011 (3 years, 4 months). After that, I moved out of India and there has been no PF contribution from Dec 2011 to present (12 months).
So total time I have had EPF account is 4 years 4 months.
1. If I withdraw right now, since I do not have a job in India would it draw a TDS ?
2. Would you recommend that I wait for 8 more months for completion of 5 years before withdrawing?
3. When I sent a request to my last employer, I was asked by HR to send Indemnity bond. I am confused, since I thought that it was required only for dormant account. My account should not have become dormant since it’s been only 12-13 months since the last PF contribution. Would you agree that the Indemnity bond is not required ?
It would be great if you could please advice me about this. I had been been banking on this withdrawal :(.
Thank a lot. Any help from you would be most appreciated.
Regards,
AJ
Hi AJ
Answer to your queries.
Would you recommend that I wait for 8 more months for completion of 5 years before withdrawing?
5 years are counted as years in which contribution was made. So no matter when you withdraw from current organization it would still be counted as 4 years 4 months
Years in which contribution has been made to Provident Fund account are counted. It can be with one employer or more than one employer provided you got your Provident Fund transferred. If you leave your job after 2 years and you do not contribute and do not withdraw or transfer your account for 3 years then still the number of years are still counted as 2 as that’s period in which contribution to EPF was made. Such accounts in which contribution is not made are called dormant accounts. For 3 years after you stop contributing your PF account will earn interest.
If I withdraw right now, since I do not have a job in India would it draw a TDS ?
TDS is applicable if you opt to withdraw the entire sum in PF balance before expiry of 5 years. TDS is applicable at the rate of your income slab. Whether you have a job or not is immaterial for TDS is Tax on source of money you are getting.
But you can claim refund. Yes you can claim for refund on TDS of EPF withdrawal for the year in which EPF is withdrawn. This is helpful if you withdraw in the year when your income is less than taxable limit for example you are studying or not working.
I am confused, since I thought that it was required only for dormant account. My account should not have become dormant since it’s been only 12-13 months since the last PF contribution. Would you agree that the Indemnity bond is not required
I was not aware of Indemnity bond. On researching found out what you said is true Quoting from Fingyan’s article on inactive EPF
If an inactive EPF account wont be claimed 3 years then the amount gets transferred to an Unclaimed Deposit Account. To withdraw money from Unclaimed Deposit Account, EPF department usually ask for an Affidavit cum Indemnity bond on Rs 100 Stamp paper along with with other documents for the withdrawal of funds.
So i agree with you. You can ask your HR why he is asking for the Indemnity bond. Please let us know what your HR says.
If something comes up we shall inform you.
Our article Tax on EPF withdrawal might be helpful to you
Hope we are able to answer your queries. If any doubt/clarification required please don’t hesitate to ask!
Dear Sir,
My EPF started in August 2008 and continued till Dec 2011 (3 years, 4 months). After that, I moved out of India and there has been no PF contribution from Dec 2011 to present (12 months).
So total time I have had EPF account is 4 years 4 months.
1. If I withdraw right now, since I do not have a job in India would it draw a TDS ?
2. Would you recommend that I wait for 8 more months for completion of 5 years before withdrawing?
3. When I sent a request to my last employer, I was asked by HR to send Indemnity bond. I am confused, since I thought that it was required only for dormant account. My account should not have become dormant since it’s been only 12-13 months since the last PF contribution. Would you agree that the Indemnity bond is not required ?
It would be great if you could please advice me about this. I had been been banking on this withdrawal :(.
Thank a lot. Any help from you would be most appreciated.
Regards,
AJ
Hi AJ
Answer to your queries.
Would you recommend that I wait for 8 more months for completion of 5 years before withdrawing?
5 years are counted as years in which contribution was made. So no matter when you withdraw from current organization it would still be counted as 4 years 4 months
Years in which contribution has been made to Provident Fund account are counted. It can be with one employer or more than one employer provided you got your Provident Fund transferred. If you leave your job after 2 years and you do not contribute and do not withdraw or transfer your account for 3 years then still the number of years are still counted as 2 as that’s period in which contribution to EPF was made. Such accounts in which contribution is not made are called dormant accounts. For 3 years after you stop contributing your PF account will earn interest.
If I withdraw right now, since I do not have a job in India would it draw a TDS ?
TDS is applicable if you opt to withdraw the entire sum in PF balance before expiry of 5 years. TDS is applicable at the rate of your income slab. Whether you have a job or not is immaterial for TDS is Tax on source of money you are getting.
But you can claim refund. Yes you can claim for refund on TDS of EPF withdrawal for the year in which EPF is withdrawn. This is helpful if you withdraw in the year when your income is less than taxable limit for example you are studying or not working.
I am confused, since I thought that it was required only for dormant account. My account should not have become dormant since it’s been only 12-13 months since the last PF contribution. Would you agree that the Indemnity bond is not required
I was not aware of Indemnity bond. On researching found out what you said is true Quoting from Fingyan’s article on inactive EPF
If an inactive EPF account wont be claimed 3 years then the amount gets transferred to an Unclaimed Deposit Account. To withdraw money from Unclaimed Deposit Account, EPF department usually ask for an Affidavit cum Indemnity bond on Rs 100 Stamp paper along with with other documents for the withdrawal of funds.
So i agree with you. You can ask your HR why he is asking for the Indemnity bond. Please let us know what your HR says.
If something comes up we shall inform you.
Our article Tax on EPF withdrawal might be helpful to you
Hope we are able to answer your queries. If any doubt/clarification required please don’t hesitate to ask!
Dear Sir,
I joined a Company in Jan 2005 and left in June 2009. The Company has a registered PF Trust. During this period I have deposited following amounts as contribution to EPF and Interest thereon. :
Employer’s Contribution to EPF and Interest thereon : Rs.102,212 and Rs.48,003
Employee’s Contribution to EPF and Interest thereon : Rs.131,164 and Rs.63,725
Voluntary Contribution to EPF and Interest thereon : Rs.605,000 and Rs.305314
During the PY 2012-13, I have withdrawn entire amount of Rs.12,55,418 and Company has deducted TDS of Rs.295,102.
The interest on Employer’s Contribution, Employee’s Contribution and Voluntary Contribution for the PY 2010-11 and PY 2011-12 is already offered for tax while filing the IT return of that respective years which was Rs.98,837 and Rs.98,527 respectively.
Kindly advise how my tax liability will be computed during PY 2012-13 ? Is voluntary contribution is taxable in spite of paying tax earlier in the year under the head Salary ? If Voluntary Contribution is not taxable, under which section and can you please advise any CASE LAWS on this ?
Your question is a difficult one. We are looking for answers. Shall get back to you by early next week.
Ajay VPF is taxed in the same way as EPF if withdrawn below 5 years!
Dear Sir,
I joined a Company in Jan 2005 and left in June 2009. The Company has a registered PF Trust. During this period I have deposited following amounts as contribution to EPF and Interest thereon. :
Employer’s Contribution to EPF and Interest thereon : Rs.102,212 and Rs.48,003
Employee’s Contribution to EPF and Interest thereon : Rs.131,164 and Rs.63,725
Voluntary Contribution to EPF and Interest thereon : Rs.605,000 and Rs.305314
During the PY 2012-13, I have withdrawn entire amount of Rs.12,55,418 and Company has deducted TDS of Rs.295,102.
The interest on Employer’s Contribution, Employee’s Contribution and Voluntary Contribution for the PY 2010-11 and PY 2011-12 is already offered for tax while filing the IT return of that respective years which was Rs.98,837 and Rs.98,527 respectively.
Kindly advise how my tax liability will be computed during PY 2012-13 ? Is voluntary contribution is taxable in spite of paying tax earlier in the year under the head Salary ? If Voluntary Contribution is not taxable, under which section and can you please advise any CASE LAWS on this ?
Your question is a difficult one. We are looking for answers. Shall get back to you by early next week.
Ajay VPF is taxed in the same way as EPF if withdrawn below 5 years!
Thanks. This helps a lot as I can now save close to 50000 in TDS (Assuming TDS @ 30%)
You are welcome Ankit. Just a request don’t blow the money saved.
Funding my higher education (MBA) through my savings rather than taking bank loan at hefty rates. But thanks for the concern. 🙂
Wow I am impressed.
Students invest both their Money and Time in order to study MBA courses, but also need to account for the earnings they are giving up to the top B-Schools. To get into a highly ranked MBA program, you have to be in a fairly good job that could very easily pay you close to six figures at-least. Add it all up, and the total cost of MBA now approaches to be higher and higher every year.
As, in today’s generation a very less people are hiring MBA’s. Also there is a steep hike in MBA unemployment rate since academic year 2008 to 2011.
Check out the infographic MBA worth it- Warren Buffet, Bill Gates are successful without MBA
I don’t want to discourage you but I hope you take decision after considering all pros and cons.
Another article that I came across is on Economic Times Cost-benefit analysis of what it means to get an MBA
Thanks. This helps a lot as I can now save close to 50000 in TDS (Assuming TDS @ 30%)
You are welcome Ankit. Just a request don’t blow the money saved.
Funding my higher education (MBA) through my savings rather than taking bank loan at hefty rates. But thanks for the concern. 🙂
Wow I am impressed.
Students invest both their Money and Time in order to study MBA courses, but also need to account for the earnings they are giving up to the top B-Schools. To get into a highly ranked MBA program, you have to be in a fairly good job that could very easily pay you close to six figures at-least. Add it all up, and the total cost of MBA now approaches to be higher and higher every year.
As, in today’s generation a very less people are hiring MBA’s. Also there is a steep hike in MBA unemployment rate since academic year 2008 to 2011.
Check out the infographic MBA worth it- Warren Buffet, Bill Gates are successful without MBA
I don’t want to discourage you but I hope you take decision after considering all pros and cons.
Another article that I came across is on Economic Times Cost-benefit analysis of what it means to get an MBA
I wish to withdraw my PF amount in the coming two months. I have close to Rs. 1,80,000 deposited in my PF (90K being my contribution and 90K is employer contribution) and interest earned is close to Rs. 15000. My taxable income this year is already Rs. 2.5 lacs due to bonuses and salaries of April and May when I was working.
In case I withdraw this PF amount, I assume that all the deductions claimed earlier under 80C, employer contribution and interest will become taxable. However, if I postpone this withdrawal to April 2013 i.e. FY 2013-14, when my income is 0, does that mean that the PF withdrawal will be my only income and hence, not in taxable limit. What my understanding is that by showing no other income, I can claim back TDS refund deducted on PF withdrawal. Please let me know if I am wrong?
Yes Ankit you caught the nuances of tax related to EPF correctly assuming you have less than 5 years of service.
TDS will be deducted on PF withdrawal if you had completed less than 5 years with your previous employer and not transferred the PF balance to new account with next employer. Had you had completed cumulative 5 years, the entire withdrawal would have been tax exempt.
If you postpone your withdrawal to FY 2013-14 then you can claim refund for TDS deducted.
Thanks for asking the question. We had missed it in our article, we shall update it.
References:Reimburse TDS on PF withdrawal Reclaim PF deduction
I wish to withdraw my PF amount in the coming two months. I have close to Rs. 1,80,000 deposited in my PF (90K being my contribution and 90K is employer contribution) and interest earned is close to Rs. 15000. My taxable income this year is already Rs. 2.5 lacs due to bonuses and salaries of April and May when I was working.
In case I withdraw this PF amount, I assume that all the deductions claimed earlier under 80C, employer contribution and interest will become taxable. However, if I postpone this withdrawal to April 2013 i.e. FY 2013-14, when my income is 0, does that mean that the PF withdrawal will be my only income and hence, not in taxable limit. What my understanding is that by showing no other income, I can claim back TDS refund deducted on PF withdrawal. Please let me know if I am wrong?
Yes Ankit you caught the nuances of tax related to EPF correctly assuming you have less than 5 years of service.
TDS will be deducted on PF withdrawal if you had completed less than 5 years with your previous employer and not transferred the PF balance to new account with next employer. Had you had completed cumulative 5 years, the entire withdrawal would have been tax exempt.
If you postpone your withdrawal to FY 2013-14 then you can claim refund for TDS deducted.
Thanks for asking the question. We had missed it in our article, we shall update it.
References:Reimburse TDS on PF withdrawal Reclaim PF deduction