Employees Provident Fund Organisation or EPFO has some income tax-related rules, knowing which may help an earning individual save his hard-earned money from the taxman. Generally, people believe that PF comes under the EEE (means Exempt, Exempt and Exempt) benefit from the Income Tax Act under Section 80C. but, it's not true when an earning individual withdraws EPF within 5 years of the PF account opening. According to tax and investment experts, one can get Section 80C benefit only when the EPF or PF account is more than 5 years old. Withdrawing EPF money within 5 years of its opening leads to income tax on the interest earned on one's investment.

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Speaking on the Income Tax norms as per the EPFO rules, Kartik Jhaveri, Director — Wealth Management at Transcend Consultants said, "Generally, people have a belief that EPF is 100 per cent income tax exempted, which is true but not in all cases. If a person withdraws money from the EPF account withing 5 years of its PF account opening, then the income tax gets applied on one's income in the form of interest and maturity amount." 

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Jhaveri said that people who do the withdrawal within 5 years of opening account get the EPF balance credit into their account after the deduction of the income tax outgo on one's income in the account. Those, who know the EPF calculation can find that but those who don't know how to calculate one's EPF maturity amount fail to find the income tax outgo from their EPF.

Standing in sync with Kartik Jhaveri; SEBI registered tax and investment expert Jitendra Solanki said, "It's better to leave the EPF as it is, where it is, than to withdraw the EPF amount within five years of its opening. Now, the EPFO rule says that the EPF account will continue to get interest as per the operational EPF account till the PF account holder attains 58 years of age." In fact, Solanki advised EPFO subscribers to try to avoid withdrawing money from the EPF account before retirement as it denies them retirement benefits.