Is withdrawn EPF amount taxable? Know more details
PF accounts are government-run and are managed by the Employees’ Provident Fund Organisation (EPFO). The scheme was established in 1952 and was initially created to offer industrial workers with a stable income after retirement.
Contribution towards the EPF account is tax exempt under Section 80C of the Income Tax Act.
As of EPF Act, an employee has to contribute 12 per cent of monthly salary to the account. The same amount is contributed by the employer. The funds accumulated in an employee’s PF account also earns interest through the course of the individual’s employment. Currently, the rate of interest on EPF account is 8.55 per cent yearly.
An EPF subscriber ideally is supposed to withdraw their EPF contribution on retirement. However, people can also withdraw the amount under certain circumstances which include medical illness, funding marriage arrangements and purchasing a new home, among others.
EPF withdrawal taxable :-
EPF withdrawal is taxable under certain circumstances which are mentioned like below :-
|1||Amount withdrawn is < Rs 50,000 before completion of 5 continuous years of service||No TDS.However, If the individual falls under the taxable bracket, he has to offer such EPF withdrawal in his return of income|
|2||Amount withdrawn is > Rs 50,000 before completion of 5 years of continuous service||TDS @ 10% if PAN is furnished;No TDS in case Form 15G/15H is furnished|
|3||Withdrawal of EPF after 5 years of continuous service||No TDS.Further, the individual need not offer the same in the return of income as such withdrawal is exempt from tax|
|4||Transfer of PF from one account to another upon a change of job||No TDS.Further, the individual need not offer the same in return of income as it is not taxable.|
|5||Before completion of 5 continuous years of service\ ifemployment is terminated due to employee’s ill health
The business of the employer is discontinued
or the reasons for withdrawal are beyond the employee’s control
Taxability – No TDS.Further, the individual need not offer the same in the return of income as such withdrawal is exempt from tax