Thanx a tonne Shakti,
I have applied the same and they have given me my Account Number. I checked my Balance and it is showing Employee Contribution of Amt. 2286 & Employer contribution as Rs. 701 which according to me is less. My monthly deduction was Rs. 450 and i worked there for 6.6 months. So logically, employee contribution itself becomes Rs. 2700 (450* 6) + Employer Contribution + Interest. Kindly help...
From India, Delhi
I have applied the same and they have given me my Account Number. I checked my Balance and it is showing Employee Contribution of Amt. 2286 & Employer contribution as Rs. 701 which according to me is less. My monthly deduction was Rs. 450 and i worked there for 6.6 months. So logically, employee contribution itself becomes Rs. 2700 (450* 6) + Employer Contribution + Interest. Kindly help...
From India, Delhi
2
First of all it is taxable and 90% people are less informed.
Now why it is taxable?
When withdrawing the exempted establishment deduct a percentage of it as TDS as per I.T.Act and it is legal.
If your EPF is more then One Lac and you are withdrawing it then you have to show in your tax return and it will be considered as Saving. So If EPF > Saving limit as per the IT law then it is taxable on withdrawal.
Please correct me if I am wrong.
Stay Cool,
Atom
From India, Phagwara
Now why it is taxable?
When withdrawing the exempted establishment deduct a percentage of it as TDS as per I.T.Act and it is legal.
If your EPF is more then One Lac and you are withdrawing it then you have to show in your tax return and it will be considered as Saving. So If EPF > Saving limit as per the IT law then it is taxable on withdrawal.
Please correct me if I am wrong.
Stay Cool,
Atom
From India, Phagwara
Dear Atomz,
As per present law P.f. deduction as well as payment with accruedinterest is tax exempt.Govt was planning to make P.F E.E.T.(exempt, exempt and tax) under the proposed direct tax code. but this has been dropped due to stiff resistance from trade unions and other inteested parties.Upto 20% of contribution towards E.P.F. is tax exempt. Similarly upto Rs 100,000/contribution towards P.P.F. is tax exempt.Repayment and accrued interest are also tax exempt. on these amounts. P.F. is also protected from attachments.Even employer/Government can not adjust any due from employee in his/her P.F.
K.Viswanathan..
From India, Delhi
As per present law P.f. deduction as well as payment with accruedinterest is tax exempt.Govt was planning to make P.F E.E.T.(exempt, exempt and tax) under the proposed direct tax code. but this has been dropped due to stiff resistance from trade unions and other inteested parties.Upto 20% of contribution towards E.P.F. is tax exempt. Similarly upto Rs 100,000/contribution towards P.P.F. is tax exempt.Repayment and accrued interest are also tax exempt. on these amounts. P.F. is also protected from attachments.Even employer/Government can not adjust any due from employee in his/her P.F.
K.Viswanathan..
From India, Delhi
Dear Prince Manash,
The withdrawal of PF Amount is Taxable if the withdrawal happens
before the expiry of five years except when the service is
terminated:
1. as a result of ill health of the employee.
2. as a result of closure of business by the employer.
3. as a result of reasons beyond the control of the employee.
When an employee leaves one job and joins another and transfers the
amount of PF from old account to the new, the withdrawal is exempted
from IT and the period with the old organisation is counted for the
five year deadline.
Fit yourself to the situation where you fall and what will be the implication of IT in your case.
With regards
From India, Haora
The withdrawal of PF Amount is Taxable if the withdrawal happens
before the expiry of five years except when the service is
terminated:
1. as a result of ill health of the employee.
2. as a result of closure of business by the employer.
3. as a result of reasons beyond the control of the employee.
When an employee leaves one job and joins another and transfers the
amount of PF from old account to the new, the withdrawal is exempted
from IT and the period with the old organisation is counted for the
five year deadline.
Fit yourself to the situation where you fall and what will be the implication of IT in your case.
With regards
From India, Haora
PF withdrawn on account of resignation/retirement is fully exempted from Income Tax. However, during service also, one can withdraw partial amount of his PF in certain cases viz. self marriage, medical, house construction etc and in these case, it will be non-refundable PF though in other cases it can be withdrawn but the amount so withdrawn will be subject to refund.
From India, Karnal
From India, Karnal
OK
those who say EPF is not taxable.
Please read the following:
Rule 9 (1) of part A of Schedule IV provides that when an employee does not satisfy any of the conditions laid down in Rule 8, the accumulated balance paid from the recognised provident fund shall be included in his total income and the tax payable on such accumulated balance shall be the differential tax calculated for each of the years concerned as if the fund had not been a recognised provident fund.
For calculation of tax, therefore, the accumulated balance which is being paid has to be split up into:
i) Employee’s own contribution year by year;
ii) Accumulated Company’s contribution;
iii) Total interest credited on employee’s contribution;
iv) Total interest credited on the Company’s contribution.
Since, the fund is to be treated as an unrecognised fund, contributions made by the employee from year to year would not be eligible for rebate under Section 88. The company’s contributions and interest credited on employees’ and company's contributions each year are however to be ignored as the employee does not receive them year to year. So, in r/o the earlier years the tax on employees salary has to reworked each year without giving rebate under section 88 on his own contribution. The amount by which the total tax so calculated for earlier years exceeds the total tax previously deducted and paid for such years shall be the additional tax payable in respect of accumulated employee’s own contributions.
In the year the accumulated balance is due, the accumulated company’s contribution and interest thereon that is being paid are to be included in the total income of the employee of that year under salary income in view of Section 17(3) (ii) which defines the expression “profits in lieu of salary” to include the share of Company’s contribution and interest thereon not exempt under Section 10(12) of the Income Tax Act. Employee’s own contribution and interest thereon are specifically excluded from the expression “profit in lieu of salary” in Section 17 (3)(ii). From this, it follows that the interest on employee’s contribution cannot be considered as salary. The interest on employee’s contribution is however, undoubtedly an income as defined under Section 2(24) and Supreme Court in the case CIT v/s G.Hyatt (80 ITR 177) has held that such interest is taxable as “income from other sources”.
PLEASE CORRECT IF BEYOND LEGAL.
Stay Cool,
Atom
From India, Phagwara
those who say EPF is not taxable.
Please read the following:
Rule 9 (1) of part A of Schedule IV provides that when an employee does not satisfy any of the conditions laid down in Rule 8, the accumulated balance paid from the recognised provident fund shall be included in his total income and the tax payable on such accumulated balance shall be the differential tax calculated for each of the years concerned as if the fund had not been a recognised provident fund.
For calculation of tax, therefore, the accumulated balance which is being paid has to be split up into:
i) Employee’s own contribution year by year;
ii) Accumulated Company’s contribution;
iii) Total interest credited on employee’s contribution;
iv) Total interest credited on the Company’s contribution.
Since, the fund is to be treated as an unrecognised fund, contributions made by the employee from year to year would not be eligible for rebate under Section 88. The company’s contributions and interest credited on employees’ and company's contributions each year are however to be ignored as the employee does not receive them year to year. So, in r/o the earlier years the tax on employees salary has to reworked each year without giving rebate under section 88 on his own contribution. The amount by which the total tax so calculated for earlier years exceeds the total tax previously deducted and paid for such years shall be the additional tax payable in respect of accumulated employee’s own contributions.
In the year the accumulated balance is due, the accumulated company’s contribution and interest thereon that is being paid are to be included in the total income of the employee of that year under salary income in view of Section 17(3) (ii) which defines the expression “profits in lieu of salary” to include the share of Company’s contribution and interest thereon not exempt under Section 10(12) of the Income Tax Act. Employee’s own contribution and interest thereon are specifically excluded from the expression “profit in lieu of salary” in Section 17 (3)(ii). From this, it follows that the interest on employee’s contribution cannot be considered as salary. The interest on employee’s contribution is however, undoubtedly an income as defined under Section 2(24) and Supreme Court in the case CIT v/s G.Hyatt (80 ITR 177) has held that such interest is taxable as “income from other sources”.
PLEASE CORRECT IF BEYOND LEGAL.
Stay Cool,
Atom
From India, Phagwara
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HC All - Trainees not covered for PF -2010.pdf
PF Ledger.xls