Got the following question in an email which Gurpreet responded to.
I have changed job and new employer has opened new PF account. I have a choice of withdrawing old PF amt or transferring to new.
If I withdraw PF, will it be treated as taxable income? If yes, can I save tax by investing partially in any government schemes / bonds?
Here is the response.
PF withdrawal is taxable if a person has worked in the company for less than 5 years. Tax cannot be saved even by investing in any govt schemes / bonds. It just gets added to income from salaries, and then the taxability will depend upon the Gross Income of the assessee.
| Head | Statutory PF | Recognized PF | UnRecognised PF |
| Employers contribution to PF | Exempt from tax | Exempt up to 12% of salary (Basic +DA) | Exempt from tax |
| Deduction under sec 80C | Available | Available | Not available |
| Interest credited on PF account | Exempt from tax | Exempt up to 9.5% | Exempt from tax |
| Lump sum payment received at the time of retirement or termination of service | Exempt from tax | Exempt from tax: | Only employees share of contribution is exempt |
| a. If the employee has worked for at least 5 years with the employer | |||
| b. If the service is terminated on account of ill-health or by contraction or discontinuance of the employer’s business or any other reason beyond control of employee | |||
| c. If the employee transfers the balance in his PF to his new PF a/c maintained by his new employer |
Any thoughts on this – has anyone done this?
Hi,
I was working in a company for 5 years 11 months and 16 days. But my company started to deduct PF after 1 year only (as I was a trainee). So my PF deduction was for 4 years 11 months and 16 days only.
My questions is If I withdraw my PF, will it be taxable.
Thank you,
Regards,
Boopathy
Sir,
I am an employee of a company, recently our co. issued Form 16. On that it is written that the Company calculated perquisite on the difference between the rate declared by PF Trust (9.5) and Government of India (8.25) so the gross salary is reduced and TDS deductible on it is also reduced but actually more TDS is deducted so take a note of it while filing Return of Income.
What does it mean?
please Reply as soon as Possible.
I found this post quite interesting and knowledge-provider.
I have two queries:
1. What is the time frame within which PF Withdrawal claim has to be settled by EPF Deptt. I have had more than 15 years continuous service and – I have resigned now and have filed PF withdrawal claim with the PF authorities.
2. Am I also entitled to Pension and if so what will be the monthly pension amount or if I opt for commutation what will be the said amount. Also please advise Is it compulory to file claim for Pension as well?
I had my EPF account with previous employer. Now I have switched my job wherein the employer has its own PF trust (i.e. no PF accnt with EPFO). When I checked with my new employer about transfer of my PF amount from previous employer I am told tht it is not possible as they have different PF entities(i.e. EPFO and own PF trust). I am told that I willhave to withdraw my PF amount. Is this correct or is there any way wherein I can transfer my PF to new employer)?
My query:
I was employed with an MNC from Oct ’06 to Mar ’07 and later on I joined an MNC Bank from Mar ’07 till April’ 10. Subsequently I joined another financial services company from April ’10 till April ’12. Currently I have not taken up any assignment. I have neither withdrawn nor transferred my PF balance from any of the above mentioned companies.
I would like to know the tax status if I withdraw the PF from each of the above companies. Or if I intend to transfer the above mentioned three PF account balances to another prospective employer’s PF fund/trust what is the tax status/relief.
Please clarify.
Thanks & Regards
Upendra
Working stint with my previous employer was from May’07 – Apr’11 (4 years). Post which I was on a sabbatical for a year, and recently joined a new organization. In the interim period, I had not claimed the PF amount for withdrawal. Since, as of today, my PF account is 5 year old can I withdraw the amount without attracting taxes on the same?
Hi,
I have almost completed 4.11 months and 10 days into company.
The CompanyA where I have joined is acquired by CompanyB after 2.5 years.
CompanyA have submitted request to transfer the PF from Company A to Company B and still that is process. I got confirmation that amount is getting transferred and will be reflected in next PF slips (2011- 2012) which is not yet released.
Question 1: If I am planning to resign and move out immediately in couple of days will get tax exception (4.11 months completed and 10 days above or possibly 2 – 3 days more to complete the release process) ?
Question 2: Do I need to submit two PF withdrawal forms or single only ?
Please let me know as soon as possible.
Thanks in advance.
hello sir..
It would be a favour if you can help me.
I have joined a co. on 14th july 2007 and i am going to resign on 7th of july,2012.I have almost served the co. for 5 years ,just a week short, but cannot continue in any condition as i am going for further studies.will my balance in recognised PF would be taxable.if yes,any ways to avoid it.
waiting for your reply.
thank you.
Khushbu,
for provident funds withdrawl to be nontaxable the period of service has to go over 5 years. Since you will be short by a week your PF withdrawl will become taxable. If you are joining elsewhere, you can transfer it instead of withdrawing the money.
ok sir..thanks for the reply..but i have one more question.
if before completing 5 years of my service, i leave the job n take a break of 2 years for higher studies and transfer my balance accumulated with the present employer to the new employer that i will join after 2 years from now i.e I will not withdraw the PF amount and keep the balance with the present employer and transfer it after 2 years.will that help me in avoiding tax implications.
Khushbu,
If you take a 2 years break and then transfer, there will be no tax implication
sir, Provident fund is taxable in which year..at the time of resignation from the job or at the time of withdrawl from the PF A/c if i decide to withdraw rather than transferring it somewhere.
Khushbu,
PF is taxable in the year you withdraw it.
Hi,
Your blog is really very informative, appreciate that:)
I have submitted the application for transfer of my last two companies PF account into my current company PF account around 8 months back.
I have 2 questions:
1) How much time this transfer is supposed to take as per the Govt rule?
2) How will I know once the transfer is done? I read somewhere that Form 23 (Annual PF Statement) from the RPFC is the only way, is it true?, if yes then please let me know when do Indian citizen get form 23 (which month of the year), also How do I ensure that I get Form 23 this year?
Niraj Kumar
Hi Sir, I worked in company A from July 2007 to Dec 2011. After that I tried to transfer my PF of Company A to my new company. But transfer did not happen for last 1 and 1/2 year.
If I withdraw my PF of Company A now in June 2012, will the money be taxable.
Thanks
Pranav
Hello,
I had opted for PF withdrawl before 5 years and the amount was Rs. 69895/- and after sometime i received Rs 48262/-. (Tax deducted is 21633/- ) I am guess around 30% tax deduction occured,but my salary comes under 20% slab.
At the time of filling Tax returns this was missed, If i refile tax, is there any refund options
I have closed the PF account after around 23 years of service(20 years in 1st and about 3 years in next) an amount of around 30lakhs. what account should I show the amount in income tax returns , will it be under income exempt from taxes? or is it not required to be mentioned in returns?
while I see the income being credited in bank account, I haven’t received the statement from PF department
Hi Mr. Gurpreet,
I joined a renowned public limited company on 27th Jan 2000 and worked in one of their factory situated in Madhya Pradesh for almost 2 years and during that period i was member of Govt. PF Scheme. On 20th Jan 2002, my services was transferred to the head office of the same company situated in Mumbai. Since, i joined there at a senior position, i became member of their own PF Scheme (which is a recognised PF scheme). After working in head office for more than 3 years , sometimes during may 2005, i left that company and joined a company in Dubai, UAE. I didn’t withdraw the balance lying in PF account until July 2011 as the company has a provision that in case i wish to join them back i can continue to be part of the PF fund. The balance continue accumulate interest on it till time i decided to withdraw it finally. While settling the payment the fund deducted TDS at the maximum rate of 30% and asked me to claim the same in my income tax return.
My queries are as under:
1. what would be the taxability of such withdrawal given the circumstances that I worked with the same company for more than 5 years but i was member of the PF scheme for less than 5 years.
The fact that PF was withdrawn 6 year after leaving the company and the fund continued the interest untill the amount was withdrawn. Can i say that i was member of the Fund for more than 5 years
2. If i have to file IT return, under which head i have to include such income. “salaries†or “other sources†if under salaries then will i be eligible for any standard deduction etc.
I would greatly appreciate your advise in this regard
Regards
Nitin Nahar
Hello,
I am abt to withdraw the PF amount after 2.6yrs of service, and my salary doesn’t come under income tax bracket,Then also does the income tax will be deducted from the withdrawal?
Hi, If I want to withdraw my PF funds after completion of 5 years. But have a gap of 1 month in my service as I did no job for 1 month due to some personal reasons. Then will PF amount be taxed?
If yes than what if I withdraw PF after 5 years of continuous service after the gap in service will my PF be still taxable?
Hi Gurpreet/Jitendra,
I worked in a company (Adobe systems) from April 2006 to Jan 2012 (more than 5 years) and now I want to withdraw the PF from my previous company.
But the company has privately managed PF and when I asked for withdrawal, they said it can only be withdrawn, if I am not in service for last 2 months when I apply for withdrawal and asking me to give an affidavit for the same. Where ever I ask, people tell me that its non taxable to withdraw PF after 5 years of service but can a company has different rules for me 2 withdraw the PF ?
I am in this big confusion as I really want to withdraw my PF and invest it in better place than 8-9% interest. Any pointers, help is welcome.
regards
Vedant
Hi
I have started a ULIP ( SARAL JEEVAN PLAN) with Birla sun life in year MAY 2008 with half yearly mode of premium 9711 Rs ( 19422 per annum) . I have filled all the Premium with out any delay till yet . Now i have paid 8 premium ( 9711*8 =77688) and todays my total amount with my policy in around Rs 55000.
Please suggest me should I continue with the same or withdraw the Policy.
Thanks
VINAY
I had completed 6 years. Now want to withdraw PF. Do I need to show it in any IT return ?
Rahul,
No you do not need to as PF after six years of services is not taxable.
Hi
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 .
I do not want to transfer the PF to my next company .
And tax slab will be accordingly to that year tax slab or the current year tax slab .
thanx
Vinay,
yes it will be taxable since it will be added to your income.The tax rate will apply fo r this financial year.
There is no special provision to save tax on PF.Hence, adding to your income the general tax saving rules will apply.
Hi, If I want to withdraw my PF funds after completion of 5 years. But have a gap of 1 month in my service as I did no job for 1 month due to some personal reasons. Then will PF amount be taxed?