PF withdrawal and tax liability

Premature PF withdrawal (under 5 years of service) is taxable. In ITR-2, the employer's contribution and all accumulated interest must be split: the employer's portion plus its interest goes to Schedule Salary under Section 17(3) (Profits in lieu of salary), while the interest on the employee's contribution goes to Schedule OS (Income from Other Sources). The 10% TDS deducted under Section 192A must be claimed under the Schedule TDS (Other than Salary) section, matching your Form 26AS.

PF withdrawal before completing 5 years of continuous service is fully taxable. Since Rajesh left within 1 year, the Rs 60,000 is NOT exempt under Section 10(12).

What gets taxed:
- Employer contribution + interest: taxed as Salary income
- Your own contribution: not taxable (post-tax money)
- Interest on your own contribution: taxed under Other Sources at slab rate

Where to report in ITR-2:
- Employer contribution portion: Schedule S (Salary)
- Interest on own contribution: Schedule OS
- TDS credit: Schedule TDS2 (Section 192A deductions)

Cross-check Form 26AS for the deductor name and TDS amount. Enter salary income without Form 16 using your PF settlement statement.

For context on how the new Income Tax Act 2025 handles these provisions, see: taxgarden.in/blog/new-income-tax-act-2025-what-it-means-for-business

Thank you Respective members for clear explanation.

Best regards,