How to treat GPF withdrawal amount by the state government servant

Hello Mr. Rajan,

Regarding your GPF (General Provident Fund) withdrawal of ₹28,80,000 credited to SBI and reflected under SFT 005 in AIS, here’s how you should treat it in ITR-1:

Treatment of GPF Withdrawal in Income Tax Return:

1. Is the GPF withdrawal taxable?

   • No, the withdrawal of GPF by a government employee at retirement is fully exempt from tax under Section 10(2) of the Income Tax Act.

   • This exemption applies to the entire amount withdrawn, including any interest accrued.

2. Reporting in ITR-1:

   • Since the amount is exempt, you do not need to declare the GPF withdrawal amount as income in the “Income from Salary” or any other head.

   • The amount will appear in your AIS (Annual Information Statement) under SFT 005 (Deposit or Withdrawal in Bank accounts) because it is a cash transaction, but that is for information only.

   • You can ignore this entry in your taxable income computation.

3. Bank auto-sweep to FD:

   • The automatic sweep to Fixed Deposit (FD) account is simply a mode of holding the money and does not impact taxability.

   • Any interest earned on the FD after the deposit is taxable under “Income from Other Sources” in the year it accrues or is credited.

4. Filing ITR-1:

   • Since you are a retired government servant and presumably have income from pension and other exempt income, you can file ITR-1.

   • Don’t include the GPF withdrawal as income.

   • Include taxable pension, interest income, or other taxable sources if any.

Summary: