I labored at a personal agency from June 2017 to December 2018 , earlier than becoming a member of a public sector financial institution. It has been three years now, however I’ve been unable to switch my provident fund (PF) accumulation to the brand new employer’s PF account. I wish to withdraw my funds from EPFO, however will this be taxable?
— Japneet Kaur
As per the provisions of Rule 8 of Half A of Fourth Schedule to the Earnings-tax (I-T) Act, 1961, gathered steadiness due and turning into payable to an worker taking part in a recognised provident fund shall be excluded from the computation of his complete earnings:
(i) if he has rendered steady service along with his employer for a interval of 5 years or extra, or
(ii) if the service has been terminated by motive of worker’s ill-health, or by contraction or discontinuance of the employer’s enterprise or different trigger past the management of the worker, or
(iii) if, on the cessation of employment, the worker obtains employment with some other employer, to the extent the gathered steadiness due and turning into payable is transferred to his particular person account in any recognised provident fund maintained by new employer; or
(iv) if your entire steadiness standing to the credit score of the worker is transferred to his NPS account
We perceive that you just intend to withdraw the gathered steadiness of the PF contribution with EPFO, in respect of your earlier employment with a personal agency. Since your interval of service with the personal agency is lower than 5 years and your case doesn’t fall in any of the opposite prescribed eventualities beneath Rule 8 as defined above, thus the withdrawal of the gathered steadiness payable shall be thought of as taxable.
I had bought shares of Neo Company Worldwide Ltd for ₹12.5 lakh in FY10-11. The corporate has now gone into liquidation. My holding, as per my demat account, is proven at a value of ₹1.52. Thus, I’ve incurred long-term capital loss (LTCL) of greater than ₹12 lakh. Can I declare LTCL in FY21-22 and what’s the process for a similar?
— Surender Kumar Gupta
As per the provisions of the I-T Act, any income or beneficial properties (together with loss, if any) arising from the switch of capital belongings shall be chargeable to earnings tax beneath the top ‘capital achieve’ and shall be deemed to be the earnings of the FY during which such switch happened.
Based mostly on the restricted info accessible, we perceive that you just presently maintain shares in your demat account and the identical has not but been cancelled/surrendered to the corporate on account of liquidation.
You aren’t eligible to assert any set-off of LTCL in FY21-22 as there was no switch of the capital asset throughout FY21-22. The identical could also be allowed as an LTCL (because the shares are held for greater than 24 months) within the 12 months during which the shares are cancelled/ surrendered. Such loss shall be required to be computed as per provisions of part 112 of the Act and reported within the return of earnings beneath the capital beneficial properties schedule.
Parizad Sirwalla is associate and head, international mobility companies, tax, KPMG in India.
Supply: Live Mint