Pf withdrawal effect on income tax

Tax queries 3207 views 6 replies

Employer used to deduct PF and 80 C Benefit was taken by the employee. Now after 5 yrs. the employee resigned and subsequently withdrew the balance from PF. Can anyone pls. suggest on the Income Tax  Liabilty due to such act.

Replies (6)

There will be no Tax liability on the same since it is withdrawn after 5 years of continious employment. However if that PF is Unrecognised PF then there will be tax liability on Employer's contribution and interest thereon under the head salaries and the interest on employees contribution will be taxable under the head income from other sources. 

Thanks a lot CA Prakash Rai. What if it is less than 5 yrs of continous service? Then will the whole PF withdrawal be taxable? Will there be any TDS implicatiions?

If PF amount is withdrawn before 5 years of continious service then the deduction availed in previous years for the deposit of PF u/s 80C shall be deemed as income of the assessee in the relevant P.Y. and no further deduction shall be allowed for contribution in that P.Y.
In my opinion, there will be no TDS implication for such event because if the assesse is not in employment anymore so how/why will the previous employer will deduct the TDS. The new emplyer however may deduct the TDS on intimation of the employee.

Such receipt shall not be seperately taxable.

Hi,

 

I worked for the company for 35 months, now i wish to withdraw the pf amount, will the amount be taxed.
 If yes what would be the tds percentage.

normal tds rates on salary will apply (acc to me )


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