I recently quit my job after working for two years and am currently unemployed. I want to withdraw the provident fund (PF) savings; will the withdrawal be taxed?
- Atul Jain
Provident fund withdrawals are tax free if one has been an employee without any interruptions in the employment for five years. In your case the provident fund amount withdrawn shall be taxable because you have voluntarily resigned from your job without rendering continuous service for five years. Also, the employer’s contribution and the interest, which were not taxed earlier, will be taxable as profits in lieu of salary.
All the deductions claimed by you in the previous years for your contributions to PF will be withdrawn, too. You will also be required to pay an amount equal to the difference between the aggregate taxes that would have been payable if tax concessions had not been given to you in the years in which you made contributions to the recognised PF. We suggest you wait till the time you find a new job and, thereafter, transfer the balance amount to your PF account with the new employer. This way, the amount will not attract any tax.