How will my gathered EPF be taxed?

I stop one firm (Company 1) in mid October 2018 after 5.5 years of steady service. I didn’t withdraw or switch the EPF from Company 1. In finish of October 2018, I joined Company 2 the place UAN was similar as Company 1. I stop Company 2 in January 2021 and joined Company 3 after a number of days in January 2021 (UAN remained the identical).

Now, I need to withdraw the gathered EPF funds for buying a plot. Most EPF stability is with Company 1. If I switch EPF of each Company 1 and Company 2 to Company 3 after which ask for advance for plot building, will or not it’s thought of taxable? Please advise.

—Amit Srivastava

From a tax perspective, as per Section 10(12) learn with Rule 8 of Part A of Fourth Schedule of the Income Tax Act, 1961 (the Act), the gathered PF stability due and payable to the worker i.e. stability to his credit score on the date of cessation of his employment, is exempt from tax if he has rendered steady service for a interval of 5 years or extra.

Where there are a number of PF accounts and the PF balances are transferred to the latest PF account, the cumulative interval of employment pertaining to all such PF accounts is required to be seen for the aim of evaluating whether or not the worker has rendered steady service for a interval of 5 years or extra.

In the moment case, the place the PF balances is be transferred to Company 3 (the most recent employer), the cumulative interval of employment shall be thought of as greater than 5 years. Accordingly, any permissible withdrawal/advance from the gathered stability shall be exempt from tax.

Alternatively, should you withdraw the stability from PF account maintained with Company 1 (with out transferring to Company 3), the stability gathered until your final date of companies with Company 1 would in any case be tax-free as you had accomplished greater than five-and-a-half years of service with Company 1.

Kindly let me know whether or not one can deduct/ modify municipal property tax paid from the taxable revenue if staying in a self-occupied home. If so, beneath what part of I-T Act? I’m a retired pensioner staying in my very own residence.

—Name withheld on request

As per the provisions of Section 23(1) of the Income Tax Act, 1961, deduction of municipal taxes is offered from the gross hire to find out the web rental worth (i.e. annual worth) which is taken into account for the aim of taxation.

However, the annual worth for a self-occupied property as per Section 23(2) is to be thought of as NIL.

Accordingly, in your case, the annual worth for a self-occupied property will probably be thought of as NIL with none deduction in the direction of municipal taxes.

Parizad Sirwalla is companion and head, world mobility companies, tax, KPMG in India.

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