When is fund withdrawn from EPF taxable?

I labored at a non-public agency from June 2017 to December 2018 , earlier than becoming a member of a public sector financial institution. It has been three years now, however I’ve been unable to switch my provident fund (PF)  accumulation to the brand new employer’s PF account. I   wish to withdraw my funds from EPFO, however will this be taxable? 

                                — Japneet Kaur

As per the provisions of Rule 8 of Part A of Fourth Schedule to the Income-tax (I-T) Act, 1961, accrued steadiness due and turning into payable to an worker taking part in a recognised provident fund shall be excluded from the computation of his whole revenue:

(i) if he has rendered steady service along with his employer for a interval of 5 years or extra, or

(ii) if the service has been terminated by motive of worker’s ill-health, or by contraction or discontinuance of the employer’s enterprise or different trigger past the management of the worker, or

(iii) if, on the cessation of employment, the worker obtains employment with another employer, to the extent the accrued steadiness due and turning into payable is transferred to his particular person account in any recognised provident fund maintained by new employer; or

(iv) if the complete steadiness standing to the credit score of the worker is transferred to his NPS account

We perceive that you just intend to withdraw the accrued steadiness of the PF contribution with EPFO, in respect of your earlier employment with a non-public agency. Since your interval of service with the personal agency is lower than 5 years and your case doesn’t fall in any of the opposite prescribed eventualities underneath Rule 8 as defined above, thus the withdrawal of the accrued steadiness payable shall be thought of as taxable.

I had bought shares of Neo Corporation International Ltd for ₹12.5 lakh in  FY10-11. The firm has now gone into liquidation. My holding, as per my demat account, is proven at a value of ₹1.52. Thus, I’ve incurred long-term capital loss (LTCL) of greater than ₹12 lakh.  Can I declare LTCL in FY21-22  and what’s the process for a similar?

—  Surender Kumar Gupta

As per the provisions of the I-T Act, any earnings or positive factors (together with loss, if any) arising from the switch of capital belongings shall be chargeable to revenue tax underneath the top ‘capital gain’ and shall be deemed to be the revenue of the FY by which such switch happened.

Based on the restricted information out there, we perceive that you just at present maintain shares in your demat account and the identical has not but been cancelled/surrendered to the corporate on account of liquidation.

You usually are not eligible to say any set-off of LTCL in FY21-22 as there was no switch of the capital asset throughout FY21-22. The similar could also be allowed as an LTCL (for the reason that shares are held for greater than 24 months) within the 12 months by which the shares are cancelled/ surrendered. Such loss shall be required to be computed as per provisions of part 112 of the Act and reported within the return of revenue underneath the capital positive factors schedule.

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

Subscribe to Mint Newsletters

* Enter a legitimate electronic mail

* Thank you for subscribing to our publication.

Download
the App to get 14 days of limitless entry to Mint Premium completely free!