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Pf withdrawal before 5 years of service

VaibhavZ (sse) (24 Points)

03 August 2013

Hi,

My PF account has been activated since 3.9 years (13 months with employer 1 + 32 months with employer 2). I have total PF balance as 1,25,633.00 in my account. If I withdraw that now... how much amount will be deducted as tax? How much amount I'll get?
Please answer ASAP so that I can take my decision accordingly.

Thanks in advance.

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2 Replies

PMA Nooruddin (M.Com, Finance Manager) (422 Points)
Replied 03 August 2013

Hi, no tax will be deducted on your pf amounts

1 Like

@VaibhavJ (Believe!! Live your dreams!) (33511 Points)
Replied 03 August 2013

PF dept. doesnt deduct any TAX while making payment, since you have not completed five years of contribution withdrawals is taxable under Income Tax act.

There is a prescribed mechanism to calculate the tax on the said PF in the year of withdrawal. Accordingly, the total of employer’s contribution plus interest thereon, which was not taxed earlier, shall be taxable as profits in lieu of salary. Further, you shall be taxed on the amount of tax benefit claimed under section 80C of the Act on account of your contribution to recognized PF, restricted to Rs.1 lakh per financial year. Also, the interest on your own contribution shall be taxed as “income from other sources”.

Rg//Vaibhav

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