FAQ’s on withdrawal of provident fund

1. Is withdrawal of PF a taxable event?

Withdrawal of PF after 5 years of continuous service will be tax exempt.  However, if, PF is withdrawn before 5 years then the taxability would be as follows:

a. Employee Contribution – It is not taxable.  However, if the employee has claimed deduction under section 80C during the prior years, then the same shall be taxed at the time of withdrawal

b.Interest on employee contribution – This portion is taxed as income from other sources

c.Employer Contribution and interest thereon – This component is fully taxable under the head income from salaries.

2. Is TDS applicable on withdrawal of PF?

TDS at the rate of 10 percent is deducted if the amount is withdrawn before completing 5 years of services. If the tax on the PF withdrawal along with other sources of income is NIL, the applicant has the option of filing Form 15H/ Form 15G for non-deduction of TDS.

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