"Will The Tax Be Deducted on Provident Fund(PF) Withdrawal?"
As mentioned above, both the employer and employee contribute towards Provident Fund. The contribution made by employees is out of their own income and therefore no question of taxation arises as the entire amount has already been taxed. The contribution by the employer is over and above salary of employee and therefore is seen as income of employee and taxed. The interest earned on the Provident Fund balance is on both employer as well as employee contributions, and this interest is also an income of employee and therefore taxed. The detailed tax treatment of different kinds of provident funds is little technical. There are rules that govern whether a certain fund will be taxable or not, the technical details of which are shown here. Tax treatment of Provident Fund can be discussed under two scenarios: * One during continuity of job, and * Upon receipt of accumulated balance of provident fund at the time of retirement or resignation The table below shows the tax treatment of ...