• ITR and Provident fund withdrawal

Hi,
I am a self-employed director of my private limited company. I withdrew my provident fund in 2023 (around 5.4 lakhs) for which I had contributed after 8 years of service. I have two queries:

1) Will the Income Tax Department be notified of this transaction by the bank or the Provident Fund office?
2) Is it possible to keep the bank statement numbers untouched but edit or change the sender details while filling ITR? For eg: 5.4 lacs were transferred by PF office using SBI account, but I showed it to be transferred by a friend, keeping the numbers same.

Thanks
Asked 7 days ago in Income Tax

Dear Sir,

Good morning

Please find my reply on this:

1.Will the Income Tax Department be notified of this transaction by the bank or the Provident Fund office?- As you are 
withdrawing it after 5 years there is no tax implications. Need not to show it.

2.Is it possible to keep the bank statement numbers untouched but edit or change the sender details while filling ITR?
For eg: 5.4 lacs were transferred by PF office using SBI account, but I showed it to be transferred by a friend,
keeping the numbers same.- No Don't Do it.

Thanks & regards
CA Sagar Basu

Sagar Basu
CA, Kolshet Road Thane
4 Answers

Not rated

Firstly, it is crucial to understand that the income tax department possesses comprehensive information regarding your sources of income through the income tax portal. Therefore, attempting to conceal income is not a viable option and may lead to severe consequences during the assessment process.

Secondly, it's essential to recognize that not the entire sum of Rs. 8 lakhs may be subject to taxation. Certain amounts might be exempt from taxation, and there are specific formulas prescribed by the tax authorities to calculate the taxable portion accurately. However, failure to disclose and pay taxes on the taxable income could result in penalties being imposed by the department, potentially up to 200% of the tax payable.

In light of these considerations, I strongly advise voluntary disclosure of the undisclosed income by filing the Income Tax Return (ITR) form, specifically ITR-U, and disclosing all relevant details accurately. This proactive approach demonstrates your willingness to comply with tax regulations and may mitigate potential penalties.

Should you require any further clarification or assistance in this matter, please do not hesitate to contact me. Your prompt attention to this issue is highly appreciated.

Ketan Agarwal
CA, Mumbai
2 Answers

Not rated

Dear Madam,

 

I understand your situation. However as you have shown the amount recd. from your friend, so  it will not form part of your income.

 

Also as the bank statement is not attached with the ITR, I don't think there is any concern.

 

Also  IT department if require will review your Bank statement directly and may ask why EPF not shown in Income, you can reply that it is exempted as recd. after 5 years of continuous service.

 

Thanks & Regards

CA Sagar Basu

 

 

 

Sagar Basu
CA, Kolshet Road Thane
4 Answers

Not rated

- Please check Form 26AS of F.Y. 2023-24 for any TDS deduction by the PF department

- If the tenure of service rendered is continuous for a period of 5 years or more than the PF withdrawal from recognised PF is exempt in the hands of an employee but you are required to disclose it in the ITR 

 

For detailed discussion you may opt for phone consultation

Vivek Kumar Arora
CA, Delhi
4871 Answers
1058 Consultations

5.0 on 5.0

1. Notification to Income Tax Department:

  • Yes, significant PF withdrawals are reported to the Income Tax Department, especially if TDS is deducted. This will be reflected in your Form 26AS.

2. Editing Sender Details on Bank Statement for ITR:

  • It is illegal to alter sender details on your bank statement for ITR purposes. The Income Tax Department can cross-verify transactions, and providing false information can lead to penalties and legal issues.

Recommendations

  1. Check Form 26AS:

    • Review your Form 26AS for any TDS deduction on your PF withdrawal.

  2. PF Withdrawal Taxability:

    • PF withdrawals after 5 years of service are tax-exempt but must be disclosed in your ITR.

    •  

  3. Amend ITR if Necessary:

    • File a revised return if your ITR contains incorrect information.

  4. Maintain Transparency:

    • Ensure all financial disclosures are accurate to avoid legal complications.

For detailed, personalized advice, consider a phone consultancy.

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
251 Answers
4 Consultations

5.0 on 5.0

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