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Tax on epf withdrawal

Anuj M (Director) (55 Points)

20 December 2013

Hi All,

I worked for a company for 4 years which maintained my EPF account. Then I joined a company which was not required to pay PF so I didn’t get a chance to transfer my PF account. I am still working for this company and my account has become inoperative after 36 months. So, if I withdraw EPF now will it be taxable ?

If answer to above is Yes, I would like to know if entire amount is taxable or only employee’s share as it was shown as investments under 80C during the years employee is employed ?

Regards,

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7 Replies

Dhruvi N suthar (Account Executive) (303 Points)
Replied 20 December 2013

Its depends on whether your pf is recognised providend pf or unrecognised providend pf

Anuj M (Director) (55 Points)
Replied 20 December 2013

How to find that out ? And how it depends in either case

Dhruvi N suthar (Account Executive) (303 Points)
Replied 20 December 2013

If approved by all appropriate authorities in india than recognised & if not authorised by any of the appropriate authories in india than URPF.

Taxability RPF URPF

Employer's contribution upto 12% salary Exempt Not Taxable

Employees contribution Deduction under 80C 80C deduction not available

Int upto 9.5% Exempt not taxable

Dhruvi N suthar (Account Executive) (303 Points)
Replied 20 December 2013

Taxabilty depends on whether its recognised or unrecognised so its compulsory to find it out.

Anuj M (Director) (55 Points)
Replied 20 December 2013

Thanks Dhruvi. It's recognized PF. Answer to your question was already there in my point 2.

Anyways, Please tell me now about taxability

Regards,

Anshul

Dhruvi N suthar (Account Executive) (303 Points)
Replied 20 December 2013

Nothing is taxable subject to following conditions:

Employee left the job after five years of service or
Where Period of service less than 5 years, the termination is due to ill health, discontinuance of business of employer. or
here on re-employment, thebalance in R.P.F is transferred to R.P.F with new employer. [For the purpose of computing 5 years period, Period of services rendered with previous employer shall also be included.]

If none of the above conditions are satisfied then:

The amount not taxed earlier shall be taxed in the same manner as URPF, As explained earlier
Any tax concession (e.g. 80C) availed by assesses forcontribution to RPF shall now be withdrawn.

Dhruvi N suthar (Account Executive) (303 Points)
Replied 20 December 2013

you might create your own providedn fund scheme or adopt any preapproved scheme of goverment.

if you create than its based on the mutual trust between you & your employee if its approved by the income tax commisonar than its become recognised providend fund otherwise it would be a part of unrecognised providend fund...

Thanks..