In comparison to all instruments Employee Provident Funds are best in the criteria of fixed income. The money saved in the EPF is for the sake of better future and actually it is meant for years after retirement.
The norm says that match of employee and employer together contributes 12 percent which is deducted from their salary. All the norms are created and controlled by Employee Provident Fund Organization (EPFO). EPFO membership provides number of benefits. Such as epfo member portal can withdraw the money for some basic needs such as purchase/construction of house.
Some things to know about PF withdrawal and taxation system:
- To increase the role of long term savings, the government has created laws accordingly that no tax liability will be there if withdrawal happens through recognized PF after continuous employment of five years.
- Due to some health issues or any other reason if an employee is terminated than it may not attract any tax liability.
- But if the withdrawal is made before 5 years of continuous employment than the withdrawal amount become taxable for the particular financial year and the amount must be shown in the Income Tax Return (ITR). Tax will be paid according to EPFO.
- The government has made slabs, up to some amount or up to some slabs which is mentioned in rules; some amount of money can be tax free if shown under section 80 C.
- If an employee made withdrawal before 5 years and if he has not submitted his PAN than he has to pay 30 percent with epfo login.
- Interest of EPF is taxable if an employee is ceased from the job but continue the EPF account just to earn interest.
- EPFO avail facility to advance to their subscribers. Subscribers have to fulfill some formalities. These advances are given for some basic expenditure such as education of children.
If an employee wants withdrawal before 5 years of continue employment and don’t want to pay the tax than there are some basic and necessary documents to be submitted.