If you have withdrawn money from the Employees Provident Fund (EPFO) during the financial year 2019-20 to deal with any financial crisis amid the coronavirus pandemic, then you will have to inform the taxman while filing your income tax return.
Experts have said information about the withdrawal from the PF account will have to be furnished in your income tax return form or ITR form even if the amount withdrawn is outside the purview of income tax. There is a provision for withdrawal on completion of five years of continuous service of the employee. But if they withdraw their PF before the period of five years, then they have to pay tax according to the rules under the income tax law.
The government has allowed people to withdraw from PF in the wake of the coronavirus pandemic. Employees can withdraw up to 75% of their account or three months basic salary and dearness allowance, whichever is less. For example, if you have an outstanding of Rs 100,000 in your PF account and your basic salary and dearness allowance is a total of Rs 20,000 per month, then you will be eligible to withdraw up to Rs 60,000.
As per government directives, an employee can withdraw money under the pandemic relief even if they have not completed five years of service. However, experts recommend that the information about the amount withdrawn must be given at the time of filing the income tax return as there can be a mismatch if the Income Tax department examines the taxpayer’s account.
This year, the ITR return form has a special column for including information about PF withdrawal. This means that it is within the scope of exemption but it is still necessary to show it. There is no penalty of any kind on this amount. Under Section 80C of the Income Tax act, a tax deduction of Rs 150,000 per annum is given in PF.