Epf withdrawl - typical situation

Tax queries 421 views 2 replies

MANISH PANDEY

TECHNICAL ARCHITECT

24 Points Joined October 2011

Hello,

I am aware of the following fact: If I withdraw my PF before 5 years of continuous contribution - it becomes taxable.

I worked for 3 companies in the past:

Ccompany1 (C1) - 3.5 Years
C2 - 1.5 Years
C3 - 8 months.

On reaching C3 - I applied for a transfer from C1 and C2.

C1 got transferred successfully to C3.
C2 messed up and the amount did not transfer to C3.

Now, I am in C4 and wanted to withdraw the previous PFs, but now I am not too sure after realing that C2 was not transferred to C3.

I have the following questions:

1. While withdrawing the amount does the EPF authority deducts tax at source and then gives away the rest of the amount? Or the responsibility lies with the individual to file it in his/her ITR?
2. If there is no TDS - can I apply for a withdrawl from C2 and C3 simultaneously and consider it as Tax free?

Thanks in advance.

Manish

Replies (2)

Rahul Gupta

Chartered Accountant

644 Points Joined November 2010

Dear it depends on the EPF you are maintaining. if the EPF you are maintaining is Recognised by Income Tax than it is tax free however if it is Unrecognised that it is taxable

If it is taxable than the authority must deduct TDS but it doesn't do so than you have 2 options

1) Disclose the income to your current employer so that it can deduct TDS on that amount also along with your salary

2) Deposit the tax as Advance Tax if total taxability is more than Rs. 10000/- or you can pay Self Assessment Tax if it is less than Rs. 10000/- In case you pay as self assessment tax if the tax is more than 10k than you have to pay 1% Simple interest along with tax commencing from 1st April of the A.Y. i.e. end of F.y. to the date of payment of tax

However as you have changed the companies too many times and C2 has messed with you so i suggest to withdraw the amount even if it is taxable. It will be in your own interest.

U S Sharma

glidor@gmail.com

21068 Points Joined January 2010

as 1 is already transferred to 3, switch 3 to 4 now ( which includes 1), as accumulated balance of PF has good returns and its for your secured future only.

withdraw 2 and pay tax on 2 only