I am serving my notice period with a company I worked for the past two years. I want to withdraw my provident fund (PF) money. How much money can I withdraw, and is there any tax deducted at source (TDS) on the withdrawn amount?
Govardhan Reddy, Hyderabad
You have not mentioned your employment status after the notice period. However, under the EPFO (Employees’ Provident Fund Organisation) Act, 1952, you can withdraw your PF balance only if you are not employed with another employer, to whom the PF law applies, for at least two months after you leave your current job. Assuming you are not taking any employment and are starting something on your own, which does not entail you making PF contributions – you could withdraw the balance in your PF after a two month cool off period, post leaving your current job. The total amount in your PF account—your contribution, employer’s contribution and the interest thereon can be withdrawn by you in such a case.
However, the PF withdrawal will trigger a tax liability in your hands, unless you have rendered continuous services for a cumulative period of at least five years with your current and/or previous employers when taken together. What this means is that if you were employed prior to this job for three years where you were a member of the PF, your total employment tenure with PF contribution will add up to five years. In such a case there will be no tax liability on you when you withdraw your PF contribution. If you are withdrawing before the five year period, there would be a tax implication on the withdrawal, which will be payable at specified rates on your employers’ contribution and your contribution, to the amount claimed as deduction in prior financial years under Section 80C of the Income-tax Act, and the interest on total contributions.
