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Salary - taxation query

sumathy sundararajan (Manager Finance and Accounts) (68 Points)

05 March 2013

Hi Friends,

I have come across this situation. A friend of mine was assessed to tax for the year 2011-2012.He duly filed ITR fr 2011-2012. He left his job during Feb 2012. In the Financial Year 2012- 2013 he has been working as a freelancer and he has closed his PF account and withdrawn the balance. His total income for the year is 360000/-. No TDS is deducted, and he has no tax laiability as he has taken a mediclaim policy for 15000 and has an investment in 80 C to the tune of 85000. kindly advise me how the PF should be treated. How to find out the employees' contribution and if tax is payable can he pay self assessment tax?

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2 Replies

Giridhar S Karandikar (Team Lead) (7543 Points)
Replied 06 March 2013

No Need to onsider teh PF for your tax liability, as the proceeds of PF are tax free.

Regards the liabilty for 2012-13, the total income is above the exemption limit i.e 260000(360000-15000-85000). You would be requried to make additional investments of 60000 or you will need to show some expenditure to being down you income below 2lacs.

does the amount of 360000 mentioned also includes the PF balance withdrawn? if that is teh case then you wont have to pay any SA tax.

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Santosh Mishra (AM) (1135 Points)
Replied 06 March 2013

If the person had not completed five years of continuous PF membership before leaving the job, interest earned and employer contributions is taxable in the year of receipts, he may require to pay self assessment taxes or show some expenditure as advised my Mr.Giridhar.

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