Is PF withdrawal taxed?

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As per the new budget proposals, Section 88 is removed and we can invest up to Rs 1,00,000 in PPF, NSC, ELSS etc.

What about the home loan principal repayment?

Can I show my actual principal -- Rs 66,000 which I am paying --  or is this still limited to Rs 20,000?

Based on the finance bill, you can show your actual principal. This is because there is no cap applicable for eligible investments. 

Initially, the cap for claiming a rebate on the principal repayment of the home loan was Rs 20,000. Now the entire principal repayment -- can availed of as tax deduction under the new section 80C. In your case, it is Rs 66,000. Of course, it cannot cross Rs 1,00,000.

However, one needs to understand that nothing can be said conclusively unless the bill is enacted in parliament and becomes a law.

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I had worked for my previous company for four years and six months.

I quit and it has been more than five years since my Provident Fund started getting deposited.

If I apply for a PF withdrawal, would it be subject to tax?

The five year period is considered from the perspective of five years of continuous employment. If you left the employment before completion of five years but joined a new employer and got your existing PF amount transferred to the new employer, then the tenure with the new employer is also counted for the five years of continuous employment.

If you are not satisfying any of the above conditions, then the amount lying to your credit in the PF account is taxable. The taxability would be as follows:

Your contribution to PF: Not taxable

Interest on your PF contribution: Taxable under the head 'Income from Other Sources'.

Employer's contribution and interest thereon: Taxable under the head 'Salaries'.

In case you were unaware, the various heads of income are:
i. Salary
ii. Income from house property
iii. Profits and gains from business or profession
iv. Capital gains
v. Income from other sources

Though TDS may be deducted from the amount being disbursed to you, it would be advisable to do your own working and determine the actual tax.

Moreover, you would be eligible for relief under section 89(1) as far as your tax liability is concerned.

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I have a flat at Noida for which I receive a rent of Rs 8,000 per month.

The society maintenance charges are Rs 1,200.

I can avail of a 30% rebate on my income.

Can I consider rent as Rs 6,800 and reduce 30% of this for payment of tax?

Only the municipal tax paid by you is allowed as expense and not the entire society maintenance charges. Accordingly, the income working would be done in the following way.

Let's assume that the rental is Rs 8,000 a month and the municipal taxes are Rs 6,000 per annum. In this case the income from house property would be calculated as follows.
 

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Illustration: Dominic Xavier