I labored in an organization for 8 years and contributed to the Employee Provident Fund (EPF). Then I labored for a small firm for about 14 months that didn’t have EPF. Subsequently, I took a break from employment for just a few months and joined a bigger firm having EPF. Have I accomplished my 5 years of steady employment for withdrawals being tax-free?
–Anonymus
Where there are a number of employers and the provident fund (PF) balances are transferred to the PF account with the newest employer, the cumulative interval of employment with all of the employers is required to be seen for the aim of evaluating whether or not the worker has rendered steady service for a interval of 5 years or extra.
In the moment case, as you had rendered 8 years of service along with your preliminary employer, you have got already rendered a steady interval of service for greater than 5 years. Further, assuming you shall switch your PF stability of your preliminary employer to the present employer, steady interval of employment shall be greater than 5 years for the aim of evaluating the continual interval to your present employer as nicely, no matter the period of your present employment. Hence, as and whenever you withdraw the PF stability out of your present employer (together with quantity transferred out of your PF account with preliminary employer) on ceasing employment there the identical might be thought-about as tax free.
However, please be aware that any accretions to the PF stability for the intervals that you simply had been on a break from employment and any accretions to the PF stability from the time that you’ll stop employment with the third group (i.e. after final day of working with the third group until date of withdrawal), could be taxable in your fingers.
Answered by Parizad Sirwalla is companion and head, international mobility providers, tax, KPMG in India
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