The Finance Ministry on Tuesday 1st March, 2016, issued an 11-point clarification on the changes made in the Budget 2016-17 on tax treatment for provident fund and NPS (National Pension Scheme). "There seems to be some amount of lack of understanding about the changes made in the General Budget 2016-17 in the tax treatment for recognised Provident Fund & NPS," the Finance Ministry said in a statement. The detailed press release is given below.
Withdrawal of Provident Fund may attract Income Tax. The Income Tax Department recently told EPFO (Employees Provident Fund Organisation) to deduct Tax (TDS) from the withdrawal amount, if the withdrawal happened before completing five years of subscription. Tax officials have cited a rule in the 1961 Income-Tax Act that taxes PF withdrawals by employees before completing five years of contributions into the EPF is taxable.
tax 'N' accounts people
Tarun Kumar Gupta
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