Withdrawal from Provident Fund (PF)

Tax Glossary Definition

Withdrawal from Provident Fund (PF)

The taxability of PF withdrawals depends on the length of an employee’s continuous service. If the balance is withdrawn after completing five years of uninterrupted service, the amount received is fully exempt from income tax. Withdrawals made earlier may attract tax on both the employer’s contribution and the interest earned.

Example: If an employee withdraws ₹5,00,000 from their Provident Fund after six years of service, the entire amount is exempt from tax.

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