PPF Update: How much tax will have to be paid on withdrawing money from a PF account, know the rules of EPFO..
Employees Provident Fund also known as Provident Fund or PF. This is the most popular scheme for continuing income even after retirement. Employees deposit 12 percent of their salary in this fund every month. Along with the employees, the company also contributes 12 percent. Interest is also given by the government on the amount deposited in this fund.
The Income Tax Department collects tax on income received from bank accounts like interest, house rent, etc. Well, similarly the amount deposited in the PF account is also taxed. Earnings from EPF accounts are taxed under many different circumstances. Today we will tell you when the is tax levied on withdrawing money from PF.
EPF account rules
According to EPF rules, whenever an employee withdraws money from a PF fund, he has to fulfill certain conditions. The entire amount from the PF fund can be withdrawn only after retirement. EPFO has set 55 years for this. Any employee can withdraw only 90 percent of the amount from the PF fund before retirement.
Whereas if a person has lost his job, then he can withdraw 75 percent from the PF fund the first time and the entire amount the second time. All employees need to keep in mind that before withdrawing money from the PF fund, they will have to submit some documents. Along with this, withdrawal from PF funds can be done only with certain conditions.
When is tax levied on withdrawing money from EPF?
If we talk about when tax is levied on EPF accounts, then let us tell you that there is no tax on EPF accounts. A tax deduction can be claimed under the Income Tax Act 80C. If the interest received on an employee's contribution or income from any other source is taxable, then it is taxed.
Apart from this, the contributions made by the company and the interest received on it are also fully taxable. If an employee withdraws money from the PF fund before working in a company for 5 years, then TDS is deducted. At the same time, if he works in a company for 5 years and after that withdraws money from the PF fund, then no tax of any kind is deducted from it.
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