Employees Provident Fund: When and how much tax you have to pay on PF money

Employees Provident Fund: employee provident fund or EPF is one of the best and probably, the safest investment option for retirement. The government-backed scheme gives a fixed return on your investment and helps you build a corpus for life post work. At the same time, it allows you to withdraw money in case of need and deal with difficult times. However, early withdrawal is not encouraged by both government as well as investment experts. In fact, to dscourage the practice, the government has formulated income tax laws. 

Here is when you have to pay tax on PF money:

1. The EPF moeny becomes taxable if the employee is not working for at least five years. 

2. If the total service period is less than five years, the accumulated EPF balance withdrawn becomes taxable in the financial year of withdrawal.

3. On withdrawal before five years of continuous service, TDS at 10% is levied.

4. If the amount withdrawan is less than Rs 50,000 or the withdrawal is made when the employer closes the business, no TDS is levied.

5. If the amount is more than Rs 50,000, and period of service is less than five years, the subscriber can submit Form 15G/15H to avoid TDS in cases where the income for that year is below the taxable limit.

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How to file an online claim for PF withdrawal:

Step 1: Login to the EPFO portal using the UAN and password.

Step 2: Verify KYC details by clicking on the ‘Manage’ tab.

Step 3: Next step is to visit the ‘Our Services’ tab and click on the option titled ‘Claim’ from the drop-down list.

Step 4: Under the section titled ‘I Want to Apply For’, the subscriber will then be required to choose the type of withdrawal claim they wish to file—full withdrawal, partial withdrawal or pension withdrawal.

Step 5: The drop-down box with the types of withdrawal will only be displayed if the subscriber is eligible to avail it.

The investor can can withdraw the entire amount or apply for partial withdrawal. The withdrawal process can be on the account of marriage, education, purchase of property, home loan repayment, renovation or pre-retirement.