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

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

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

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

  The job has been temporary for these five years
If you have been working on a contract within five years, your PF will not be deposited, your employer does 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 completing 5 years. And now if you want to transfer your EPF balance somewhere else, then it will be taxed because, out of the five years you have completed, you have spent some part of it in a temporary position.

Your fund is not recognized
A provident fund that has not received approval from the Commissioner of Income Tax is considered ineligible for tax exemption. It may be approved by the Provident Fund or some other institution, but to get an exemption on withdrawal after 5 years, approval is required from the Income Tax Commissioner. 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 continuous years of service
  TDS will not be deducted, but if the person 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 continuous years of 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 completing five years
  TDS will not be deducted. He will not have to show this withdrawal even in the return of income.

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

If you have to leave the job for some reason before completing five years of service/the reason for withdrawing money is beyond your control.
  TDS will not be deducted. It will not have to be shown in the return of income, because it is not taxable.

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