PF Withdrawal before completing 5 years

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One of our clients has salary income, dividend income, bank interest income, and income from the sale of listed shares. The client has also withdrawn PF from an in-house (exempted) PF trust before completing 5 years of continuous service.

Which ITR form should be used in this case, and how should the tax on the PF withdrawal be calculated?

Replies (2)

For a client with salary, dividends, bank interest, capital gains from listed shares, and early PF withdrawal, the correct form is ITR-2 (not ITR-1, since there are capital gains from shares).

On the early PF withdrawal tax (from exempted trust, before 5 years):

- Employer contribution + interest on it: taxable under Salaries (Section 10(12) exemption lost)
- Own contribution: amount claimed under 80C in prior years becomes taxable (added back to income under Salaries)
- Interest on own contribution: taxable under Income from Other Sources
- TDS under Section 192A at 10% if withdrawal exceeds Rs. 50,000

In ITR-2, report:
- Employer portion and its interest under Schedule S
- 80C reversal and own contribution interest under Schedule OS
- Capital gains from listed shares under Schedule CG (STCG/LTCG based on holding period)
- Dividend income under Schedule OS with TDS credit from Form 26AS

If the trust is an exempted PF (not standard EPFO), the treatment follows trust deed terms. TDS certificate from the trust will confirm which section was deducted under.

For the full tax treatment on premature EPF/PF withdrawal, this [Section 192A EPF withdrawal guide](https://taxgarden.in/blog/section-192a-tds-epf-pf-withdrawal-india-guide) covers the computation with examples.

An employee resigned after 4 vears of employment, didn't join a new job and withdrew entire pf amount of Rs.8 lakh. As she has only interest income in this fy, entire rs.8 lakh comes below the threshold. Other than adding 80c claims in the previous years, should she spread the income into last 4 years as the pf may be considered as unrecognized fund?

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