If a retired person wants to withdraw his or her money, deposited in Employees’ Provident Fund (EPF) at the time of retirement, it is fully exempt at the time of withdrawal.
Whose money is exempt from tax apart from the retired employees?
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EPF is significant and one of the most widely-used tools for retirement planning.
Withdrawal of money deposited in the EPF after five successive years of contributions is also completely tax-free.
However, if the withdrawal made before 5 years of service is more than Rs. 50,000 or Form 15G or Form 15H has not submitted it is subject to tax or TDS.
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The amount that is received at regular intervals in the form of annuity is also taxable.
The PF corpus can be withdrawn but many employees don’t withdraw it as they believe that they would be earning interest on the same, which continues to remain tax-free.
According to reports, after any active contribution to the EPF, the interest earned on the corpus is taxable.
So, the retired persons, are advised to withdraw the deposited money in EPF after retirement.
EPF, which was enacted in 1952, is an effective tool for Indian citizens to save for their future and time of retirement.
With an interest rate of 8.65% accrued on the funds annually in an employee’s PF account, the PF has proved to be a high gain, low-risk measure to save for one’s future.
Superannuation at the time of retirement can be withdrawn up to one-third of the total corpus and the balance amount is to be converted into an annuity fund.