Taxability on PF amount withdrawn
If an employee has been in continuous service of for five years or more, withdrawal amount from PF account shall not be taxable. While computing the period of continuous service of five years, the service rendered with existing employer as well as rendered to former employer (s) should be factored. However withdrawn amount should be reported in Tax return form in the schedule titled exempted income.
If cumulative Period is less than five years, then entire withdrawn amount (employer’s contribution plus interest thereon) shall be taxable in the hands of employee as profit in lieu of salary as per sec. 17(3) of the Act.
Further employees’ contribution if claimed benefit under sec. 80C, shall be taxable on account of own contribution.
Interest on own Contribution shall be taxable as ‘’income from other sources’’.
Tax at source may also be deducted by private PF trust at the time of making payment.
Website : www.amitarun.com