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Direct Taxation
If there is premature withdrawal from RPF its taxable. Tds 10% and also rule 9 says employee shall pay tax as if its URPF bcz he earlier took deduction and summation of such incremental tax is paid by employee. So here isn’t it double taxation cause at withdrawal tax been paid on same fund for 2 times? I am not able to get this point plz explain
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Best Answer
Premature withdrawal from the RPF is taxable and attracts TDS at 10%. When an employee withdraws from the RPF before completing five years of continuous service, the employee will have to pay tax on the amount withdrawn as if it was an unrecognized provident fund, and the incremental tax liability will be borne by the employee. This is not double taxation, but rather the tax liability that was deferred earlier due to the upfront tax benefit provided to the employee.
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