PF Trust of previous employer can withhold TDS from quantity paid to you

I labored in an organization between 17 February 2016 and 28 December 2018. The firm’s captive belief managed the worker provident fund (EPF) contributions. For some cause, the cash was not transferred to my new employer. I’ve been jobless for the previous 6 months now as a consequence of covid. Can I withdraw the PF quantity from my earlier firm? What TDS and taxation do I anticipate contemplating that on 17 February 2021 I accomplished 5 years as a member of that PF belief although the service was for 2 years solely. Please advise.

— Pankaj

The PF steadiness with the your earlier employer’s belief might be withdrawn topic to the provisions of the precise PF Trust guidelines of your former employer.

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 amassed PF steadiness due and payable to the worker i.e., steadiness 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. In your case, as you haven’t rendered service for five years along with your earlier employer and the PF steadiness amassed along with your former employer had additionally not been transferred to your PF account with the next employer, the PF steadiness upon withdrawal shall be chargeable to tax in accordance with Rule 9 of Part A of Fourth Schedule of the Act. Further, holding PF belief membership for greater than 5 years wouldn’t change tax implications. Also, please notice that TDS could also be withheld at supply by the PF Trust of your former employer from the quantity paid to you.

Parizad Sirwalla is accomplice and head, world mobility providers, tax, KPMG in India. Queries and views at mintmoney@livemint.com

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