Taxability of PF withdrawal
This query is : Resolved
29 March 2010
If an employee withdraws PF within 5 years of his service, Is PF so withdrawn taxable??? If yes, What portion is taxable? and at What rate?
29 March 2010
1. If it is a statutory providend fund, the entire amount is exempt from tax under section 10(11) of the Income tax Act,1961.
2. If it is a recognised providend fund,the amount received is taxable since the employee had not rendered continuous service of five years.
3. If it an unrecognised providend fund, the accumulated balance of employers contribution along with interest accrued on that part of contribution is taxable as profit in lieu of salary. Interest on employee's contribution is taxable under the head"income from other sources' as per supreme court decision in the case of CIT Vs Hyatt (1971) 80 ITR 177.
2. If it is a recognised providend fund,the amount received is taxable since the employee had not rendered continuous service of five years.
3. If it an unrecognised providend fund, the accumulated balance of employers contribution along with interest accrued on that part of contribution is taxable as profit in lieu of salary. Interest on employee's contribution is taxable under the head"income from other sources' as per supreme court decision in the case of CIT Vs Hyatt (1971) 80 ITR 177.
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30 March 2010
Sir,
Based on your above reply, I would like to know that in case of a Recognised PF, since the entire amount received is taxable, it would imply to both employers as well as employees contribution alongwith interest. Is it so?
Based on your above reply, I would like to know that in case of a Recognised PF, since the entire amount received is taxable, it would imply to both employers as well as employees contribution alongwith interest. Is it so?
Padmaja CA
(Expert)
31 March 2010
Yes
CA Ravi Sisodia
(Expert)
31 March 2010
yes taxable
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