As per the domestic tax law, the withdrawal of PF is taxable if it is withdrawn without rendering continuous services for five years or more with the employer.

On change in the employment in past, if you had transferred the accumulated PF balance to the PF account of the current employer, then the period of previous employment is also included as part of continuous service and accordingly the five years will be calculated.

Consequently, if you have rendered total continuous services for five years with the current employer (including previous employer’s period of service and PF balance from the account maintained by the previous employer transferred to current employer) then the entire PF withdrawn will not be taxed in the year of receipt of the accumulated PF. However, if this is not the case, then the entire amount will be taxable. The total of employer’s contribution plus interest thereon, which was not taxed earlier, will be taxed as salary.

Further, the amount of tax benefit claimed under section 80C on account of your contribution to the recognized PF shall be taxed, subject to cap of Rs.1 lakh per financial year (FY) if this was considered as exempt from tax in the FYs. Also, the interest on your own contribution shall be taxed as “income from other sources”. The tax rate would depend upon your applicable income slab.

I plan to put my house on a reverse mortgage scheme. What will be my tax liability?
—Ayaz Jehani

Any transfer of residential house property in India under the reverse mortgage scheme by an individual who is 60 years of age or above does not attract capital gains tax.
Further, any amount received as a loan either in lump sum or instalments under reverse mortgage transaction is exempt from tax. Accordingly, there will be no tax implications in your hands when you put your house under the reverse mortgage scheme.

However, if the mortgage house is sold for the purpose of repaying the loan, there will be capital gains tax implications. The tax on sale of property would depend upon the period of holding of the house from the date of acquisition, cost and other factors.