Home Loan Tax Benefits: Under the Income Tax Act, an individual can avail of tax benefits on home loans taken for more than one house. But taking all home loans together, tax exemption can be claimed under 80C only on the principal amounts up to Rs 1.50 lakh and interest payments up to Rs 2 lakh per annum. Know to Balwant Jain, an expert on tax matters, in such cases, even after not completing 5 years of service, there is no tax to be paid on withdrawing money from EPF.
Question: After working for 4 years and 4 months, I have decided to do some work of my own. Can I withdraw complete money from my EPF account? I understand that it is necessary to work for five years to withdraw the entire amount from the EPF account on which no tax is to be paid. Is there another choice or declaration form available for someone who wants to leave their job? Or pay tax.
Answer: As far as money deposited in EPF account is concerned, if you have not worked for 5 years and have not deposited money in EPF account for five years, then as per Rule 8 of the Income Tax Act, you will have future To pay tax on withdrawal of money deposited in the fund. What will happen? Withdrawal from EPF before 5 years gives tax exemption on certain conditions. Tax exemptions are possible in cases where an employee lost his work due to illness, the employer decided to shut down or stop operating, or there was some other uncontrollable circumstance.
But that is not the case in your case and you have not completed the period of five years of service. In this case, you will have to pay tax on the amount you withdraw from EPF. If the total amount exceeds Rs 50,000, the PF authority or trust will make the payment after deducting 10% tax. The amount deposited by the employer in EPF will be taxed under the head salary. Whereas, the amount and interest will be taxed on the employee’s share under the head income from other sources. You may claim tax exemption under the standard deduction if there is no other income.
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