I labored in Company A for 12 years after which moved to Company B and labored for 2.5 years. There was a niche of 1 month between the 2. Thereafter, I finished working. Company A had deposited my Employees’ Provident Fund (EPF) contributions in a PF account, whereas Company B opened a special account for PF. Four months after leaving Company B, I transferred Company A’s PF account to Company B’s PF account. My standing is non-salaried ever since I left Company B. I’ve following questions: 1) will the tax therapy for the 2 corpuses (at Company A and B) be totally different if I withdraw your complete quantity at the moment? 2) will Company B corpus entice tax deducted at supply (TDS)? 3) will Company B corpus be taxable on withdrawal?
It is assumed that you have ceased employment earlier than finishing the age of 55, and you have not migrated overseas completely.
Queries 1, 2 and three: The collected PF stability due and payable to the worker (the stability to his credit score on the date of cessation of employment) is exempt from tax if he has rendered continuous service for a interval of five years or extra. Where there are a number of employers and the PF balances are transferred to the PF account with the latest employer, the cumulative interval of employment is seen. Since the cumulative interval of employment is greater than five years, the collected stability to the extent payable to you submit ceasing employment with employer B shall be exempt.
It might also be famous that for the interval that you have been on a break from employment, you would not be thought of as an worker of any group and, therefore, any accretions within the collected PF stability as a consequence of you throughout this era would even be taxable in your palms. Tax on the identical ought to be paid by way of the prescribed advance tax instalments (if relevant) and/or self- evaluation tax previous to submitting of the tax return.
As you have rendered continuous service for a interval of five years or extra, there ought to be no TDS, whereas crediting these quantities to you/or on the time of withdrawal made instantly submit cessation of employment with employer B.
Parizad Sirwalla is accomplice and head, international mobility providers, tax, KPMG in India. Queries and views at [email protected]