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PF withdrawal tax

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Saurabh

16 Points Posted on 10 May 2007

I changed my job in the month of July 2005 from a PSU where i as working for over 10 years. I received gratuity as terminal benefit . I also withdrew my entire PF balance with the employer, on leaving thejob. I joined another job where my PF is being deducted regularly. Thus for FY2006 i will have my Form 16 from two employers.

Please let me know

whether gratuity is exempt from tax

whether PF withdrawal is taxable.

thanks and regards

Replies (1)

Rinit

25 Points Posted on 10 May 2007

Gratuity--- least of following will exempt @
1.Rs.3,50,000
2.Gratuity received
3.15*(salary last drawn/26)*10/11#(#if u have served more than six months in a 11th year )

So in your case
Assumed that Basic salary is rs.20000p.m.+da rs.2000p.m.

1.Rs.3,50,000
2.Rs.2,00,000(assumed to be received)
3.Rs.{15*(Rs.22000/26)}*11=Rs.139615

so least of above Rs.1,39,615 will be exempt

@ provided u r governed by payment of gratuity act 1972

PF-pf will be exempt for the 2006-07