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Interest on PPF

Page no : 2

shiva (sales manager) (22 Points)
Replied 21 October 2011

sir, i had applied for PF withdrawl from my previous employer ICICI BANK. but they gave me a mail that      " if your membership is less than 5 yrs of service, you are eligible for 33 .9% tax on PF."  and when asked under which rule it is taxable they said it as  

"  As per Schedule IV Rule 8, 9, 10 of the Income tax Act, 1961 if the resigned employee has not completed 5 years of continuous service, appropriate tax will be deducted out of the PF settlement. This is not applicable where PF amount is transferred to the new employer or where the trust has received the inward transfer from ex-employer and the period of total service including the service with ex-employer is more than 5 years or resignation is on account of specified exceptional circumstances prescribed under Schedule IV Rule 8,9 , 10.  they have given the above reply by email.   

 SIR , is there any such rule or act saying that if employee works less than 5years , his provident fund is taxable. as u said above that P.F is not taxable and exempted from income tax. plz can u clarify this issue. and i was surprised that the tax is 33.9% ,.sir plz do guide me . 

Thank You

U S Sharma (glidor@gmail.com) (21031 Points)
Replied 21 October 2011

Originally posted by : shiva

sir, i had applied for PF withdrawl from my previous employer ICICI BANK. but they gave me a mail that      " if your membership is less than 5 yrs of service, you are eligible for 33 .9% tax on PF."  and when asked under which rule it is taxable they said it as  

"  As per Schedule IV Rule 8, 9, 10 of the Income tax Act, 1961 if the resigned employee has not completed 5 years of continuous service, appropriate tax will be deducted out of the PF settlement. This is not applicable where PF amount is transferred to the new employer or where the trust has received the inward transfer from ex-employer and the period of total service including the service with ex-employer is more than 5 years or resignation is on account of specified exceptional circumstances prescribed under Schedule IV Rule 8,9 , 10.  they have given the above reply by email.   

 SIR , is there any such rule or act saying that if employee works less than 5years , his provident fund is taxable. as u said above that P.F is not taxable and exempted from income tax. plz can u clarify this issue. and i was surprised that the tax is 33.9% ,.sir plz do guide me . 

Thank You

Your employer is right, for service below 5 years, PF withdrawl is taxable in the year of withdrawl.

 

if you have continued your service at 2nd employer, then shift the amount there and continue, back period will be added to the new empoyer PF account. 

shiva (sales manager) (22 Points)
Replied 22 October 2011

Sharma ji thank u very much for that clarification..i have one doubt if that 33.9% is deducted from PF than what is that tax called as____? and how can we claim that  amount deducted taxed amount back, shud  i file any returns or TDS  .plz  guide inhow to claim that 33.9% tax amount back..

thank u

sivram

U S Sharma (glidor@gmail.com) (21031 Points)
Replied 22 October 2011

such withdrawl would get added in your net taxable income, and would be taxed accordingly, 

when PF withdrawl is made before completion os 5 years, all deductions made in previous years would get added to taxable income. and employers contribution would be added as additional salary, interest would be also taxable, 

you can use the tax deducted to set off your tax liability if any, and claim refund if excess after making adjustments.


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