The period of service is an important factor. If you have completed a continuous period of service for five years and more, then the maturity proceeds received are tax-free in your hands. Also, what is important is the period of holding, i.e., the corpus standing at the end of your retirement date is the tax-free corpus. The interest earned on the corpus post no active contribution is taxable in your hands as per your marginal rate of tax. This implies that post-retirement there being no contribution, the interest accrued is taxable, i.e., March 2019 interest is taxable in the income tax return of FY19.

I am working in a PSU and we have only NPS. In my previous job, I was covered in EPF and I worked there only for three years, meaning I would have to pay tax for withdrawal. But whenever I submit the claim form, I get an error message saying “the name in the EPF does not match with the name in the income tax database" and because of this, I may have to pay around 33% of the amount as tax if I submit the request since the withdrawal amount is greater than ₹50,000. What do I do to get the amount claimed by paying TDS of 10% only?

—Nitish

You need to check your name in the records of your previous employer and your PAN card as that is the record holder in the income tax database. In case there is no difference between the two, then follow up with your previous employer. In the event of any difference in the name, you need to get it rectified at one of the two places so that it matches for ease of withdrawal. However, this will not change the tax rate applicable.

As your continuous period of service is less than five years, the PF is taxable at your marginal rate of tax.