Dear Sir,
In one of your post you have mentioned interest earned on epf balance (employee + employer's contribution) is taxable @9.5% for Recognized PF category.
I have below mentioned queries -
- Currently I'm working with an MNC in IT industry.Will it be considered as Recognized PF category ?
- Is this tax applicable only when full amount is withdrawn from EPF after retirement or every year do I have show it in my ITR as 'Income from Other Sources' & pay tax on that amount ?
- Lets assume for FY2018-19 till March,2019 my epf balance was 10000 and Interest credited by epf is 1000 based on that years epf interest rate. Now if I calculate 9.5% p.a. interest on epf balance 10000 it will be 950. But since interest credited by epf is 1000 which greater than 9.5% interest rate then the remaining 50(=1000-950) will be taxable. So I have to mention that 50 as Income from Other sources while filing ITR for FY2018-19 and pay tax on that 50 rupees as per my tax bracket. Am I correct ?
- Sometime I have seen EPFO will credit interest not on march month of financial year.Rather they will credit the interest on june-july. How to show interest income in that case while filing ITR ? Will it be current financial year or next financial year ?
1 Answers
Dear Sanjoy,
Kindly note that if interest rate offered on RPF/EPF is less than 9.5% then such income is tax-exempt. Anything above this rate is taxable as per individual's income tax slab rate.
1 - Kindly check with your employer on this. Mostly, it can be RPF (they may have their own PF trust or the funds may be managed by the EPFO).
2, 3 & 4 - EPF full withdrawals before 5 year service period is a taxable income. Also, interest accumulated during the non-contribution phase is a taxable income.
Read :
EPF Interest Income & Withdrawals | Tax Implications | Is EPF Interest taxable?
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