Does withdrawal of pf from tata provident fund qualify as exempt income?

I asked the Tata company, and they say that they follow the EPFO rules. But they declined to comment on anything about whether the amount is taxable. I consulted a CA and he said that since she completed 5 years at the Tata company, the amount withdrawn is tax exempt.

If that's the case, then why was the company declining to comment about tax liability?

Could anyone on this forum help with a link to where these rules are specified by the Income Tax department? I'd like to verify it.

 

ps: I found Tata's handbook online: https://sangam.tatapower.com/irj/go/km/docs/SangamFiles/content/Payroll/Employee%20Hand%20Book.pdf

Hi,

Taxability of Provident fund withdrawn is governed by Employees Provident Fund & Miscellaneous Provisions Act along with the Rules framed thereunder. Refer the below image.

Above image is a snip from government website.

For questions related to provident fund, esi, prof. tax or similar labour laws I would recommend a labour law consultant. However, few CAs who specialize in such laws can also answer your questions.

Best,

Aditya

www.iravya.com

 

 

1. In your case make sure the EPF is a recognized one. Only those EPF which are recognized by the Commissioner of Income Tax will be allowed as an exemption. 
2. If it is unrecognised then it will be taxable even if it is withdrawn after 5 years. The entire contribution will be subject to tax. 
Please correct me if the above solution has an alternative view. 

Thank you Aditya and Suresh, but I got my answer sometime back. Yes, it is a recognized EPF, but if the withdrawal is made let's say, 6 months after resignation and if the employee had completed 5 years of service in the company, then the amount accumulated until the service is tax exempt. After he left the job (assuming he didnt transfer the EPF amount to an EPF account of another company) the interest accumulated for the 6 months should be declared under other sources of income. Since schedule IV is not very clear about this particular rule, there was a tribunal ruling somewhere around 2017 that clarified it. https://www.financialexpress.com/money/warning-your-epf-account-will-now-be-taxable-if-you-have-quit-or-retired-from-job/935448/