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Anil

Anil Rego  |373 Answers  |Ask -

Financial Planner - Answered on Nov 27, 2020

Anil Rego is the founder of Right Horizons, a financial and wealth management firm. He has 20 years of experience in the field of personal finance.
He’s an expert in income tax and wealth management.
He has completed his CFA/MBA from the ICFAI Business School.... more
kikki Question by kikki on Nov 27, 2020Hindi
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I have worked continuously in one organization for ~ 32 yrs having its own PF trust and left job at the age of ~ 54 yrs. I have withdrawn MY PF at the age of ~ 59 Yrs. My query is whether PF withdrawn (app. 35 lakhs) at the age of 59 yrs after leaving 5 yrs of job is taxable or not?

FYI,

1. My organization has not deducted any TDS when PF was withdrawn at the age of 59 yrs
2. I was not employed after leaving job at the age of ~ 54 yrs as employee anywhere.

Ans: Since, you have worked for more than 5 years in the organisation, there is no tax on PF interest upto the period you were employed.Interest on PF is taxable after this period.

DISCLAIMER: The content of this post by the expert is the personal view of the rediffGURU. Users are advised to pursue the information provided by the rediffGURU only as a source of information to be as a point of reference and to rely on their own judgement when making a decision.
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Sanjeev

Sanjeev Govila  |458 Answers  |Ask -

Financial Planner - Answered on Dec 06, 2023

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I worked in company A for 5 years and accumulated PF and then I joined company B and worked for 8 months and accumulated PF. Before I could link these 2 PFs account, I got a job abroad and worked there for 7 years. As my contract is over, I had to return to India. I am presently getting rental income of Rs. 12 Lakhs per annum and paying tax on that. My age is 55 years now. Can I withdraw both the PF amount totalling Rs. 15 Lakhs as on date? Is it taxable? To avoid Income tax, do I need to wait till 60 years of age?
Ans: The retirement age set by the Employees' Provident Fund Organization (EPFO) is 58 years for private sector employees. Therefore, you are not eligible for full PF withdrawal (contribution + pension). However, early retirement age is set at 55 years of age.

The taxability of your PF withdrawal depends on two factors:

• Your service period: If you have completed at least 5 years of continuous service (without any breaks exceeding 6 months), then the entire PF amount (including employer and employee contributions) is tax-free at the time of withdrawal.

• Your contributions made after 1 April 2004: If you have made any contributions to your PF account after 1 April 2004, then the interest earned on those contributions will be taxable.

Moreover, you need to verify the following to ensure the complete PF amount is tax-free:
• As your both accounts (company A and B) are not linked, you need to get them linked to avoid any tax implications.
• Whether there were any breaks exceeding 6 months in your service period.

Waiting until you turn 60 years old will not automatically make your PF withdrawal tax-free. The taxability still depends on your service period and contributions made after 1 April 2004, as mentioned earlier.

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