Refund on TDS deducted on EPF withdrawal

The gist is that there should be contribution regularly and withdrawal after five years otherwise TDS could not have been deducted by the EPFO.

It was an unrecognised PF. Withdrawal will be fully taxable.

under which section has the TDS been deducted because if it wasnt a recognised one they might have deducted TDS as salary income?

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Thank you.

Hi,

Since you not completed the continuous five years of service, your EPF withdrawl will be taxable and 10% TDS will be deducted.

Taxation will be as follows:

1. Your contribution - taxable as income from other sources only if you have claimed deduction for the same I'm earlier years.

2. Interest on your contribution - taxable as income from other sources 

3. Employer contro and interest thereon - taxable as salary.

Dear Sir,

Hope you are doing well !!

The provident fund that is not recognized by Commissioner of Income Tax is known as an unrecognised provident fund.

Tax on Unrecognized Provident Fund:

An employer’s contribution towards provident fund is tax exempt. The retirement payment is taxable under the following conditions:

1. Payment received in respect of employer’s contribution and interest is taxable under the head Salaries.
2. Payment received in respect of interest on employee’s contribution is taxable under the head Income from other sources.
3. Payment received in respect of employee’s contribution is not chargeable to tax.

Further, the unrecognised employee provident funds are mere facilities for accumulation of retirement corpus with limited tax benefits compared to the PF and the PPF. 

Hello,

Withdrawal from EPF before the completion of five continuous years of service is taxable. Tax rates applicable would be marginal rates, that means rates applicable to you in the year in which contributions were made.

Whether you can claim refund would depend upon your net taxable income.

I hope this answer satisfies your requirement.

Regards,

CA Hunny Badlani

Sum received on termination of Unrecognized PF, Employer's contribution and interest thereon are taxable as salary income, Employee’s own contribution is not taxable(since no deduction was available under 80C), Interest on employee’s contribution is taxable as income from other sources.