Pf withdraw// double taxation

I have a big double of TDS on EPF withdraw.

Let's start with an example.

FY 2016-17

Mr. B is getting basic salary per month Rs. 15,000/-...

Interest income received from bank fd per month Rs. 20,000/- ...

Total Salary Income Rs. 1,80,000/-

Total Interest Income Rs. 2,40,000/-

EPF deduced on 1,80,000*12%=21,600/-

He has already paid income tax on this 1,80,000+2,40,000=4,20,000/-...

Now on 13.05.2017 he check that his epf balance is 70,000/- He wants to withdraw 60,000/- (before 5yrs)

In this case on 60,000/- tds will be deducted i.e. same amount going to tax again which he has already paid income tax on 1,80,000/-

So how this epf withdraw amount is taxable twice?

Replies (6)
epf contribution would have been claimed u/s. 80C subject to a maximum of 1.5 lakhs. tax will be charged on total income (after allowing chapter vi A deductions). so there's no double taxation. correct me if iam wrong

As per the provision of Income tax it has already prescribed that employees contribution and employer contribution from recogniged provident fund is exempt income. If any time tds deducted on that contribution then the amount will be taxable in that pf withdraw year.

 

If this recognized pf is exempt income then why it's need to deduct tds?

if the pf is withdrawn within 5 years, then the withdrawal is taxable if the withdrawal amount exceeds 50000 (previously 30000)

Yes I know about that 5yrs provision as I mention the same above. But my question is if recognized provident fund is exempt then why it's need to deduct tds on this exempt income????

There is no double taxation as you in the given example you would have claimed deduction in respect of your deposit to epf.

it is a precondition just to make sure that you stay invested for at least five years.
the pre condition is that if you withdraw pf amount after 5 years it is exempted or else it is taxable hence deduction of tax at source is mandatory

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