BackPF withdrawal requires a cooling period of two months
PF withdrawal is taxed only if you haven't rendered continuous service for five years or more
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Can a retired senior citizen, with taxable income above 3 lakh, submit Form 15H restricting a bank from deducting tax from interest earned on fixed deposit receipt (FDR) and pay the same due as self assessment?
—Shiv Om Jaitu
The Form 15H can be submitted by a senior citizen who is resident of India during the financial year (FY) only if the tax on his total taxable income (also considering estimated income likely to be earned) is nil. As your taxable income (here we are assuming that all eligible deductions and exemptions have been made) is above the basic exemption threshold for FY 2014-15 (i.e. 3 lakh), you would be required to pay taxes.
Accordingly, you cannot legitimately submit the Form 15H restricting the deduction of tax from interest earned on FDR.
While paying the self assessment tax at the time of filing the tax return, you should consider the taxes deducted by the bank on interest earned on FDR and would accordingly be required to pay the balance tax liability.
I recently left an organization after having worked there for over five years. Since I do not have immediate need of money, I plan to withdraw the accumulated amount in my provident fund (PF) after 2-3 years. My understanding is that for three years it will earn interest at the declared interest rate. What would be the tax implications on withdrawal?
—Vikram
The withdrawal of the accumulated balance from a recognized PF triggers tax liability only if the employee has not rendered continuous services for five years or more to the employer.
While computing the continuous services of five years, the period of previous employment is also included, if the accumulated balance maintained with the old employer is transferred to the PF account of the new or current employer.
Since you had already rendered service with the employer for over five years, there should not be any tax implications on withdrawal of the PF accumulations including interest.
However, you would be required to report the PF accumulations in the tax return form to be compliant from a disclosure perspective.
Further, the withdrawal of the PF accumulations will be as per the provisions of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
In accordance with the Act, you are required to have a cooling period of two months. So, you can withdraw the accumulated PF balance after two-three years or alternatively transfer the same to the recognized PF account maintained with the new employer, if any.
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