Tax on pf
Guest
(Querist) 30 December 2011
This query is : Resolved
Dear Sirs,
one of my employees is facing a problem.
he worked in Tata Infotech Ltd some 25 years back. recently he received a letter from them that his PF can be collected from them and was asked for form 16. Since it is a 25 year old issue, the form 16 is not available. the company has now written the following to my colleague
"Please note, as you are unable to provide us the Form 16's, we request your
confirmation stating that you allow us to deduct Tax at the highest Tax
rate i. e 40%".
my question is
(a) are they allowed to deduct tax on PF which is dormant for the last 25 years/
(b) is the tax deducted @40%?
(c) if form 16 is not available, is company liable to give form 16 if we demand it from them now?
(a) if tax dedcution is inevitable, would the experts recommend transfer of this PF to the current company PF account?
please help on how we can reply back to the company so that we do not suffer.
regards
Sushil
Anirudh
(Expert) 30 December 2011
Dear Mr. Sushil,
You have to come out with more details/facts.
Which Form-16 that they are demanding?
Can you paste here the letter received from them?
Deepak Nair
(Expert) 30 December 2011
Please provide details as asked by Mr. Anirudh
prabhakar singh
(Expert) 30 December 2011
They are playing smart,send him form 16 of income tax and pan number also.visit a local tax lawyer.
Sanjeev
(Expert) 31 December 2011
the company is liable to deduct tax on the lumpsum payment on retirement.
To deduct TDS the company would need to know the employees tax bracket as this PF amount would be clubbed with the current years annual Income of the receiver and then the tax bracket in which the individual falls is to be found.
There is nothing wrong in providing the same. The company is duty bound under IT Act to deduct TDS if you dont provide them the Income details (Form-16) for current year he is left with no option than to deduct the same at highest rate of 40% assuming you fall in that tax bracket.
Even if they deduct more TDS than the individual can seek refund from IT epartment at the time of filing the return.
There is no legal issue involved here. The company is right and if you dont provide the Income details let them deduct at 40% and seek refund later.
Tax deduction is mandatory even if you transfer to current company it would be deducted later when you withdraw.
As per me they would have asked for current form-16 do you mean the form -16 at the time of retirement that the company should have.
R.Ramachandran
(Expert) 31 December 2011
Dear Mr. Sanjeev,
Please clarify, for my benefit, which provision in the I.T. Act requires deduction of TDS at 40%?
Further, which provision requires that final payment from PF is taxable?
What is the Form-16 according to your understanding? Can you please attach the said form for my benefit?
Guest
(Querist) 02 January 2012
dear sirs,
The company needs form 16 of the year when the employee was working in Tatas. Also, i i need clarification on the taxability of the PF and interest on PF . isnt this non taxable?
even if it was taxable, Do we club the PF and its interest with the current year income for taxation? if yes then the company should have asked for current year's form 16 and not 1987 form 16.
moreover, if the company is asking form 16 of the year when the employee worked for them, cant we ask them to provide the same?
the employee was sent the following message from Tatas
" Dear Amit,
We are in receipt of PF Settlement application. Request you to please send us the below documents :-
1> Pan card copy
2> Form 16 (For the Tenure in TIL) "
A. A. JOSE
(Expert) 03 January 2012
I think the company's requirements needs to be complied with.
