Iam a software professional working for a software company having their private provident fund trust. I have been told that if i quit before 5 years and opt for withdrawing the PF amount rather than transferring it, 30% tax will be deducted from my PF amount. Please provide some clarification.
RE:Tax deduction on Provident Fund
by Amitabh on Apr 29, 2007 01:03 PM Permalink
Any accumulated balance of recognised provident fund due and payable to the emplyee is exempt if any of the following conditions are satisfied 1.Emplyee has rendered a continuous service of more than 5 years OR 2.The service is not continuous and has been terminated by reasons beyond emplyee's control such as ill health,cessation of emplyer's business,etc OR 3.The balance has been transferred to another recognised provident fund on cessation of employment. So it is clear that unless you can show point no 2,the service has to be for more than 5 years or PF balance has to be transferred to a recognised provident fund. All this is as per sec 10(12) of the Income tax Act 1961 3
