Tax implications on withdrawal of PF
Let us understanding the tax-ability of proceeds received from withdrawal of Provident Fund. Condition 1: Withdrawal of PF after completion of 5 years of service. Proceeds received from withdrawal of PF from the fund accumulated over a period of more than 5 years is EXEMPT from tax. Period of employment with all the previous employers shall be included in calculating the 5 years period provided, the old PF account is merged with the new employer. Condition 2: Withdrawal of PF before completion of 5 years of service. Proceeds received the withdrawal of PF before completion of 5 years of employment shall be TAXABLE. Let us understand the taxability of PF in details. PF withdrawn shall have 4 components namely, Employer's contribution, Employee's contribution, Interest on Employer's contribution, Interest on Employee's contribution. a) Employer's contribution Contribution made by employer in the accumulated balance shall be TAXED under the head INCOME FROM SALARY. ...