Do I need indemnity Bond ? Not sure whether account dormant.

Ash 1
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Hi,

My EPF started in August 2008 and continued till Dec 2011 (3 years, 4 months). After that, I moved out of India and there has been no PF contribution from Dec 2011 to present (12 months).
So total time I have had EPF account is 4 years 4 months.

  1. If I withdraw right now, since I do not have a job in India would it draw a TDS ? From what I understand, if at the time of withdrawal I do not have a Job (in India) then the withdrawal will not attract TDS.

  2. Would you recommend that I wait for 8 more months for completion of 5 years before withdrawing?

  3. When I sent a request to my last employer, I was asked by HR to send Indemnity bond. I am confused, since I thought that it was required only for dormant account. My account should not have become dormant since it's been only 12-13 months since the last PF contribution. Would you agree that the Indemnity bond is not required ?

It would be great if you could please advice me about this. I had been been banking on this withdrawal :(.

Thank a lot. Any help from you would be most appreciated.

Regards, AJ

indemnity-bond tax-deduction epf-withdrawal income-tax
1 Answers

I am not sure why indemnity bond is asked in your case as its not been three years since your account was inactive. Did EPF/HR department mentioned any section (like 72 (6)(ii)) under which they asked for such bond.

In order to save income tax on EPF withdrawal, EPF account should be active for atleast five years. In your case this period is 3.4 years only so withdrawal would attract income tax.

EPF department generally don't deduct TDS (too lazy to compute taxes and deposit same with IT department) and would pay withdrawal amount as it is. It would be your responsibility to compute tax on this income and pay taxes on it.

Pankaj Batra5212

Hi Pankaj,

Thanks for your reply. I apologize for the delay in getting back.

What is considered as the period for which EPF account is active ? In my case : 3.4 years is the time for which EPF account has contributions made to it. ALSO, an additional one year has passed after that when no contributions were made.

So would my account be (3.4 + 1) years old ? If that is the case, my account would be 4.4 years old. Would you suggest waiting for 5 years to be completed ?

Also, I read somewhere that if I am not employed when I apply for a withdrawal, no tax would be deducted ?

Thanks a lot !!

Ash•

An EPF account remains active until its getting contribution. For EPF withdrawal to be non-taxable, you should have atleast five years of EPF account in active mode.

As per our knowledge there is no such rule that if somebody is unemployed, withdrawal becomes tax free.

Pankaj Batra•
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