Employer’s PF Share Cannot Be Deducted From Member’s Salary

I left a company after serving four years and 11 months. On resigning, I was given only my contribution to the Employees’ Provident Fund (EPF) and the employer’s contribution along with interest was withheld by the company saying that a period of five years was not completed. Please advise.

—Rahul R.

As per the Employees Provident Fund Act, the employer’s share cannot be deducted from the member. Also, it cannot be recovered from the salary of employees. Logically, the payment received in respect of employer’s contribution along with the interest before the completion of five years is taxed in the hands of an account holder as ‘salary’. If the employee PF was deducted and not paid, it is incorrect. You can reach out to your officer-in-charge for getting the same rectified.

I worked in different organizations from April 2013 to November 2018 with no gap in PF contribution. I have transferred the PF on timely basis to the latest account. Recently, I withdrew the amount from the latest PF office (Madhapur, Hyderabad) and see there is a 10% tax deducted on source (TDS) even after submitting 15G and completion of over five years of continuous service. I raised a grievance also, but no response yet. Please suggest what I can do?

—Venkatesh

As you had a continuous employment for five years and had also transferred the PF to the respective organisations, there should not be any TDS at the time of withdrawal. Also, it does not even require the Form 15G to be submitted, which is only required if you withdraw PF before the completion of five years and your income, including EPF withdrawal is below the threshold of taxable limit.

Nonetheless, if TDS has been inadvertently deducted and you have raised the grievance you can follow up the same at appropriate levels. However, if there is no recourse, then at the time of filing the income tax return you can claim the refund of the tax deducted on PF. Do ensure to keep all the documentation of PF in place to prove the completion of five years as it may be called for in case there is an Income tax scrutiny.

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