if S.P.F.—Fully exempted u/s 10(11).
Amount withdrawn or refunded from Credit balance of Recognised Provident Fund:
Any lump sum amount received or refund taken from accumulated credit balance of recognized provident fund shall be fully exempted subject to some conditions as mentioned in rule 8 of part A of the fourth schedule
As per rule 8, exemption is allowed in the following cases :
In case employee is taking the refund after putting up continuous service for a period of 5 years or more.
In case employee has not completed 5 years service but he is taking the refund as his service has been terminated due to ill-health, discontinuance of employer’s business, the contract of service was for less than 5 years or any other case beyond the control of the employee. It simply means that the employee is leaving not of his own sweet will.
- In case employee has got job with another employer and his provident fund account was transferred to such new employer and total service with both the employers is 5 years or more.
3. if U.R.P.F.—Taxable portion is added in salary income.
Taxable portion is equal to employer’s contribution i.e. interest on this part. Interest on own contribution to U.R.P.F. is taxable under the head “Income from other sources.”