Rental funds to kinfolk could invite the taxman’s scrutiny

I labored for Company A for 2 years earlier than becoming a member of Company B. I left Company B simply three months after becoming a member of. I’ve two PF member IDs with one UAN. I’d prefer to withdraw my PF and pension quantity from Company A. Am I eligible to withdraw my full pension?

—Zishan Khan

We have assumed that you’re an Indian citizen and your KYC has been accomplished. We have additionally assumed that Company A is your first employer.

In relation to withdrawal of your PF and pension quantity with Company A, you will want to submit a web-based declare type. Once the particulars are verified and the kinds are submitted (Form 19 and Form 10C), the withdrawal software shall be processed. After due verify and verification by the authorities, the accumulations could be credited to your designated checking account.

It could also be famous that you probably have labored for lower than six months, the pension contributions can’t be withdrawn as the foundations say that for many who haven’t but accomplished six months in service, the withdrawal profit just isn’t out there.

Accordingly, in case you apply for the withdrawal of your corpus with the PF account of Company A and the PF account of Company B individually, you shall not obtain the pension steadiness in your PF account with Company B.

However, in case the steadiness within the PF account of Company A is transferred to the Company B account, the full service shall be greater than six months and also you shall be eligible to withdraw your pension steadiness in your account with Company B as properly.

Please word that because the cumulative service interval in each firms is lower than 5 years, there could be tax implications in your arms on the time of withdrawal even for those who switch the steadiness within the PF account of Company A to the account with Company B.

I’m an IT sector worker and I stick with my mother and father at a rented lodging in Madhya Pradesh. My mother and father personal a home in a close-by city. Can I declare HRA for his or her home whereas I stay in a rental home at a unique place? I can present all legitimate paperwork resembling lease receipts, electrical energy invoice, rental settlement, and so forth.

—Name withheld on request

As per Section 10(13A) of the Income Tax Act, any allowance particularly granted to an worker to fulfill the expenditure truly incurred on cost of lease for a residential lodging occupied by him/her shall be exempt from tax to the extent prescribed.

Accordingly, the first situation to be eligible for claiming HRA exemption is that the rented property needs to be occupied by you. In the moment case, it seems that the parental home towards which you plan to assert the HRA exemption is not going to truly be occupied by you. In such a case, you shall not be eligible to assert exemption for the lease paid to your mom in direction of such lodging, which isn’t occupied by you.

Also, please word that any rental funds to kinfolk could in any case be liable to additional scrutiny by the tax authorities.

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

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