• Tax on epf withdrawal

I am currently in the US. I worked in India from [deleted]. I have nearly 5 lakhs in my old company's PF trust fund. I want to withdraw it. I want to know how much tax will be applicable if I withdraw now. I have less than 5 years of continuous service in India. I also want to know if I can claim any exceptions on that tax. If Yes, I want to know if I will get any form to fill. I have a home loan on my name in India. I am paying interest and principal every year, I want to know if I can claim tax credit by showcasing these.
Asked 4 months ago in Income Tax

Assuming your residential status is NRI

Withdrawal of PF amount before completion of 5 years of service is taxable (except employee cont.). In your case, rate of TDS is 10.4%. Employer cont. and interest on such cont. would be taxable under the head salary and interest on employee cont. would be taxable under the head income from other sources. If total income would be less than Rs. 2.5 lacs then you can file Form 15G and no TDS would be deducted.

 

For detailed discussion, you may opt for phone consultation

Vivek Kumar Arora
CA, Delhi
4840 Answers
1037 Consultations

5.0 on 5.0

 The employee's contribution portion is taxed under the head "Income from Salary," while the interest on the employee's contribution and the entire employer's contribution, including interest, are taxed under the head "Income from Other Sources." The tax rate will be as per the slab rate. Deduction under 80C can be claimed for principal on home loan and interest will be deductible under income from house property.

Ruchi Goel Anchal
CA, Gurgaon
525 Answers
16 Consultations

5.0 on 5.0

As an NRI, the withdrawal of your PF amount before 5 years of continuous service is taxable in India. The tax treatment is as follows:

  1. Employee's PF contribution: Taxed as salary income at the applicable slab rate
  2. Interest on employee's contribution: Taxed as income from other sources at the applicable slab rate
  3. Employer's PF contribution + interest: Taxed as income from other sources at the applicable slab rate

At the time of withdrawal, 10.4% TDS will be deducted on the full amount. However, if your total income for the year will be below Rs 2.5 lakhs, you can submit Form 15G to avoid TDS.

You can claim tax benefits on your home loan as follows:

  1. Principal repayment - Deduction under section 80C, up to Rs 1.5 lakhs
  2. Interest payment - Deductible from income under Income from House Property, with limits

In summary, the full PF withdrawal is taxable for you as an NRI with less than 5 years of service. However, you can lower your tax liability by submitting Form 15G if income is low and claiming deductions on your home loan principal/interest payments.

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

 

Thank you.

Shubham Goyal

Shubham Goyal
CA, Delhi
212 Answers
4 Consultations

5.0 on 5.0

Since it is more than 2.5 lakh they will deduct Taxable at 30%+ cess.

 

However, since your income is below 5 lakh and need to check your home loan you might have to pay just 5% tax on above and claim refund of remaining amount.

 

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

Thank you.

Naman Maloo
CA, Jaipur
4272 Answers
97 Consultations

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