Special Case Tax On PF Query

Prateek (A.M) (25 Points)

05 February 2010  

Hi. Thanks for reading & answering my query.

I am working in a consulting & advisory MNC. For PF puposes for PF cut my company cuts 12% share and also their share of 12% from me. Meaning I pay for my Company's 12% share too!! I cannot complain here as the the my employment offer clearly stated that my package included employers contribution of 12% towards PF too.

So my query is the following:-

  1. I plan to go for higher studies in next Fy so will have to withdraw my PF. I would not be completing 5 years of service with this company and is the first time Iam getting my PF deducted.so what I want to know is that will whole amt. be taxable or only the interest. As EMPLOYER'S share I'am contributing will that be taxable too.
  2. Secondly is it necessary to contribute towards PF. I mean my Basic Salary is above the limits specified by the PF ACT but my company says it is cumpulsory due to some internal policy. Can't I talk to them without creating any much hassel....actually I feel deducting PF is not good currently for me. I usually invest Rs 1 Lakh in ELSS to gain Tax EXemption. With PF I will need to withdraw and the amt will I think become taxable.....if I withdraw next year....as I need the funds for my MBA.
  3. Also how much tax is deducted...meaning will I get PF amt. credited in the bank a/c after deducting tax or I will have todeposit it. Also if it is TDS then what is the rate...is it 22.5% or 30% or any other rate.
  4. Also Suppose Even if I withdraw the PF Amt Next Year and they (designated autorities) cut tax on it but if my whole year income less than the taxable limit will I get the taxed amount back
  5. Also If I leave my PF account as it is after leaving my job...I mean I do not withdraw the PF amt.....and suppose after my MBA I get a good job abroad and leave my PF a/c for 5 years (total) untouched then if I withdraw the amt will it be taxable.

I know it is rather long query but I will be gratefull if somnebody replies as my 12% share and employers 12% share (which Iam contributing) works towards around 1 Lakh.

I THANK you all in advance for all your help & Efforts!!

Thanks again!!