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Tax queries: Income received from provident funds outside India cannot be taxed

 23 Jun 2017

Dilip Lakhani, Senior Chartered Accountant, answers queries related to tax from our readers.

When I was worked abroad for a few years, my PF was deducted from my salary. In FY17, I transferred my PF savings to India in my savings account. Do I have to pay tax on this in India in FY17. During my stay abroad, I paid regular income tax there & while leaving that country, I had taken full clearance from tax authorities there.
I understand that your status for the purpose of tax was non-resident in the year in which the interest is accrued on your provident fund account.

As the income is accrued and received outside India, the said income will not be taxable in India, even if you have transferred the PF amount to your savings account in India subsequently. You will be liable to pay tax in respect of the income earned in India.

I am 56 years old and resigned from my company nine months ago. The PF is maintained by a private trust of the company. I have not taken up any further employment. My EPF corpus is still with my erstwhile organisation. Can my PF corpus accumulated so far remain with my earlier organisation? If so, until what period and is the interest earned on it taxable? Can I withdraw the entire PF corpus as non-taxable? If not, what is the retirement age?

If the PF maintained by a private trust of the company is a recognised provident fund and you render continuous service for more than five years, then the accumulated balance withdrawn from PF including interest thereon will be exempt. If the PF is not recognised or the period of continuous service rendered to the employer is less than five years, then you will be liable to pay tax.

You will be required to pay tax on the deduction already claimed us.80C with respect to your contribution to PF and the interest thereon. Further, the total employer's contribution plus interest thereon, which was not taxed earlier, shall be taxable as profits in lieu of salary. For claiming the amount withdrawn from provident fund as exempt, there is no minimum age criteria.

I had purchased an apartment under construction for which the builder collected service tax and VAT upfront at the time of registration.The property is still under construction and I have pending installment of 5% via home loan.Will my payment attract GST?
With respect to residential property under construction, any instalment which will be paid after the implementation of GST, you will be liable to pay GST at 12.5% as per the proposed applicable rates. In case you make the payment of balance 5% before 30 June 2017, you will be liable to pay service tax of 4.5% on the amount paid in June 2017.

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