Topic: Upon leaving present employment will the amount received on withdrawal be taxable?

I have been working in a software company for past two years; I now intend to start my own concern in software development. During present employment there was PF deduction every month wherein both, I and my employer used to contribute.

As you correctly 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 considered 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. On termination of employment nothing shall be taxable if duration of service is 5 years or more [For the purpose of computing 5 years period, Period of services rendered with previous employer shall also be included if on re-employment, the balance in R.P.F is transferred to R.P.F with new employer ]

Since in your case total period of employment is less than 5 years following treatment shall apply upon withdrawal:

(i) Employer's contribution and Interest on accrued balance shall be taxable.

(ii) Any tax concession (e.g. 80C) availed by assesses for contribution to RPF shall now be withdrawn.

Fields marked * are mandatory
Got a question?
Just fill in the following:
Name*		E-Mail*
Phone No.*		City
Message (up to 1000 characters)