Pf withdrawal query

This query is : Resolved

Lawson (Querist)
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21 July 2019 I worked for a company for 3 years and my PF had accumulated there. I did not transfer this PF to my new company. Now i have withdrawn this PF after 8 years. Do i still have to pay tax on this amount

Basically if my PF has been kept for more than 5 years, but i have served the company only for 3 years... Then are the proceeds taxable when i withdraw after 5 years

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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31 May 2020 If you withdraw from EPF before completing 5 years of continuous service, TDS will be deducted. In calculating 5 years of service, your tenure with the previous employer is also included. If you transfer your EPF balance from the old employer to a new employer and your total employment is 5 years or more, no TDS is deducted. Do remember that you must calculate the exact 5 years, there is no grace if you are short by a few days.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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31 May 2020 How are withdrawals taxed
Your EPF payout has 4 components.

a) Your contribution/employee’s contribution

b) Interest on your/employee’s contribution

c) Employers contribution and interest on employer’s contribution

a) Your contribution/Employee’s contribution – This is the amount contributed by you to your EPF. This portion of your withdrawal is not taxable. However, if you have claimed deduction under section 80C on your contribution in earlier years, you may have to pay additional tax as if 80C was not claimed by you for those years.

b) Interest on your/employee’s contribution – This portion is taxed as income from other sources.

c) Employer’s contribution and interest on employer’s contribution – Employer’s contribution and interest on it is fully taxable. It is taxed under the head salary in your tax return. When TDS is deducted on it, you are likely to see an entry under salary TDS in your Form 26AS for it.

Rates of TDS

TDS is deducted @ 10% on EPF balance if withdrawn before 5 years of service.Remember to mention your PAN at the time of withdrawal.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.

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