PF Withdrawal Taxability

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This discussion addresses the taxability of Provident Fund (PF) withdrawals made before completing five years of continuous service. The user is seeking clarification on whether both employer and employee contributions, including interest, are taxable, especially when the PF from a previous employer was withdrawn. Guidance is sought on specific legal provisions that might exempt the withdrawal or allow for tax savings, particularly when filing income tax returns.

Tripti Singh

Tripti Singh (Querist)

24 December 2021 Hi,

Please assist on below query:

I have withdrawn the balance from my PF account before completion of 5 years of service with CG India private Ltd.
TDS has already been deducted on withdrawal
Its not clear to me if the amount of withdrawal (both employer and emloyee contribution including interest is taxable or exempt)
I have been in more than 5 years of continuous service including my previous employer
The current employer from whom I have withdrawn PF I was in less than 5 years of continuous service and the balance withdrawn pertains totally to current employer contribution
How to decide on Taxability / any provision which can make the contribution exempt.
Please guide accordingly as I have to finalise and file income tax return for current year
Any provision which can help to save some tax.

Thanks in Advance,
Regards,
Tripti

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

24 December 2021 Both employer and employee contribution including interest is taxable in case of pf of previous employer is not continued in the current employment

Tripti Singh

Tripti Singh (Querist)

24 December 2021 do we have any reference in law stating this?
I checked the law reference and continuous service was mentioned as inclusive of service from previous employer

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

24 December 2021 Yes, agree with you but did you continued the PF account.

Tripti Singh

Tripti Singh (Querist)

24 December 2021 No the Pf from previous employer was already withdrawn.
The PF balance withdrawn in les than five years pertains to current employer.
Tenure is 14.10.2016 to 04.01.2021.

Tripti Singh

Tripti Singh (Querist)

24 December 2021 also please let me know if we have any specific provision in law detailing this scenario
It would be easy for reference.
Thanks in advance for the valuable guidance.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

25 December 2021 See the link.

https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.timesnownews.com/amp/business-economy/personal-finance/planning-investing/article/withdrawal-from-epf-becomes-taxable-before-5-years-of-service-10-things-you-need-to-know/787740&ved=2ahUKEwjR3-va_v70AhUPYsAKHRYfCRoQFnoECAQQBQ&usg=AOvVaw32Hb4GIPt_5s--SpkmJ7KZ

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