A person worked 2 years for a company. company Deducted40K as his Providend Fund. he would like to withdraw the total amount of his employeer and his own with interest. what is the tax implication for this. Is entire amount taxable ?
Harshil (Article) (37 Points)
25 July 2011A person worked 2 years for a company. company Deducted40K as his Providend Fund. he would like to withdraw the total amount of his employeer and his own with interest. what is the tax implication for this. Is entire amount taxable ?
kamal kishor sen
(STUDENT Rajasthan)
(2156 Points)
Replied 25 July 2011
The five year period is considered from the perspective of five years of continuous employment. If you left the employment before completion of five years but joined a new employer and got your existing PF amount transferred to the new employer, then the tenure with the new employer is also counted for the five years of continuous employment.
If you are not satisfying any of the above conditions, then the amount lying to your credit in the PF account is taxable. The taxability would be as follows:
Your contribution to PF: Not taxable
Interest on your PF contribution: Taxable under the head 'Income from Other Sources'.
Employer's contribution and interest thereon: Taxable under the head 'Salaries'.
Though TDS may be deducted from the amount being disbursed to you, it would be advisable to do your own working and determine the actual tax.
Moreover, you would be eligible for relief under section 89(1) as far as your tax liability is concerned.
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