• TDS on EPF

I am doctor by profession. the project i was working ended last May. I withdrew the entire EPF in August. 10 percent TDS was deducted. Can I claim this amount as the project ended and as per norms mentioned in epf site it should have been exempted?
Asked 1 year ago in Income Tax

Hello Sir,

 

Yes, you can claim it while filing ITR as the project ended.

 

 


There would be no tax liability on withdrawal.

 

Karishma Chhajer
CA, Jodhpur
2387 Answers
20 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

Please elaborate your query further. 

 

There are certain cases when withdrawal before five years does not become taxable. These cases are as follows:
a) If the service is terminated due to employee's ill health;
b) Due to discontinuance of the employer's business;
c) Or any other reason beyond the control of the employee."

 

 

If the total period of service is less than five years (except for above cases), accumulated EPF balance withdrawn becomes taxable in the financial year of withdrawal.

 

It is to be noted that there are four parts to any EPF contribution— employee’s contribution, employer contribution and interest earned from both employer’s contribution and employee’s contribution.

 

-In case the period of continuous service is less than five years, the sum total of the employer’s contribution to EPF and interest earned on it is taxable under the head “salary" in the subscriber’s income tax return.

 

-The subscriber’s own contribution portion of the withdrawal is not taxable. But if the subscriber had claimed deduction under Section 80C on his contribution in earlier years, it becomes taxable under salary. It is to be noted that the EPFO subscriber’s own contribution towards EPF is eligible for deduction under Section 80C of the Income Tax Act.

 

-The interest earned on the subscriber’s own contribution portion is taxed under ‘income from other sources’.

 

-On withdrawal before five years of continuous service, TDS or tax deducted at source @10% is levied.

 

 

 

 

Payal Chhajed
CA, Mumbai
5077 Answers
152 Consultations

5.0 on 5.0

If you were hired on project you should have worked as professional rather than employee now if the EPF is to be withdrawn before 5 years and if its not due to your ill health or closure of business then you need to pay tax on same.

However if the project has ended then you may claim it as closure of business and get it exempt however if the business was for more than that project and only you have left business then you need to include it in your taxable income.

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
3791 Answers
45 Consultations

5.0 on 5.0

Hello,

 

Whether the withdrawal has been made before five continuous years of service.

If it has been made before the stipulated 5 years time period, then it can be exempt If the service is terminated due to employee's ill health or due to the discontinuance of the employer's business or any other reason beyond the control of the employee. If it is covered under any of these three cases, it won't be taxable.

If you were hired only for the project which has ended, then you can claim it as exempt.

 

I hope this answer satisfies your requirement.

 

Regards,

CA Hunny Badlani

 

 

Hunny Badlani
CA, Madhya Pradesh
2555 Answers
9 Consultations

5.0 on 5.0

Hi,

 

Withdrawal from EPF is exempted if you have completed five years of continuous service before withdrawing the money.

 

Otherwise it will be taxable. So, the TDS deducted will be adjusted against your tax liability.

Lakshita Bhandari
CA, Mumbai
5460 Answers
539 Consultations

5.0 on 5.0

Hi

Yes it can be claimed. 

Swati Agrawal
CA, Mumbai
1146 Answers
7 Consultations

5.0 on 5.0

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