PF Update: How much tax will have to be paid on withdrawing money from PF account, employed people should read this news..

Salaried professionals need to calculate tax on their salary and file income tax returns on time. Now, there will be tax on salary, but when you are filing Income Tax Return (ITR), you will also have to show income from other sources and your other income can also be taxed. In such a situation, you will also have to keep in mind whether you will have to pay tax on the income received from any source and which income comes under the ambit of tax.

Do you pay tax on PF withdrawal?
Now let’s talk about EPFO’s Employees Provident Fund. Salaried employees have to deposit PF money from their salary and along with the employee’s contribution, your money also gets invested in this government scheme. You can withdraw money from it after maturity, but you have the option to withdraw money from your PF account even before that, you should know whether you will have to pay tax on EPF withdrawal or not.

Withdraw money before 5 years
If you withdraw money from your PF account before completion of five years of contribution, you will have to pay TDS on it. For this you will have to remain in service continuously for 5 years. This takes into account your tenure with both new and old employers. If you transfer your EPF balance from the old employer to the new employer after five years or more, TDS is not deducted from your funds.

The job has been temporary for these five years
If you are working on contract within five years, your PF will not be credited, your employer will not have to contribute to your PF. But suppose that after some time you become permanent in the job and your PF starts getting deducted. You leave this job after completion of 5 years. And now if you want to transfer your EPF balance somewhere else, it will be taxable because you have spent some part of the five years you have completed in a temporary position.

Your fund has not been recognized.
A provident fund which has not received approval from the Income Tax Commissioner is considered ineligible for tax exemption. It can be approved by the Provident Fund or any other institution, but approval from the Income Tax Commissioner is required to get exemption on withdrawal after 5 years. If you are a member of URPF, your withdrawal is taxable whether you have completed five years or not.

Understand it like this-
If you withdraw less than Rs 50,000 before completing 5 years of continuous service.
TDS will not be deducted, but if the individual falls in the taxable bracket then he will have to show the EPF withdrawal in his return of income.

If you withdraw more than Rs 50,000 before completing 5 years of continuous service.
10% TDS will be deducted on giving PAN. That too will not be deducted if Form 15G/15H is submitted.

If you withdraw from EPF after completion of five years then
TDS will not be deducted. They will not even have to show this withdrawal in their income return.

If you want to transfer PF money from one account to another after changing jobs.
TDS will not be deducted. This will not have to be shown in the income return, because it will not be taxed.

If you have to leave the job for any reason before completing five years of service/withdrawal the reason is beyond your control.
TDS will not be deducted. This will not have to be shown in the income return, because it will not be taxed.