income tax on PPF closure before 5 yrs

[janes joseph]

PF/VPF qamount is normally free from tax, including interest gained on it. But if its closed before 5yr continuous service, then its taxable.

So, if i close my account before 5 yr but the final amount i receive will not cross my tax limit for that FY, then should i pay any tax on PF/VPF ?

Say, if i have a total income including pf closure amount within 2 lakhs/2.5lakhs(new limit), I dont have to pay tax, right ?

AI Summary

Tax Implications of Early Provident Fund Closure Explained: No Tax If Total Income Below Threshold, Section 111 Applies. A discussion on a forum addressed the tax implications of closing a Provident Fund (PF) or Voluntary Provident Fund (VPF) account before completing five years. The initial query questioned whether tax is applicable if the total income, including the PF closure amount, remains below the taxable limit. A chartered accountant clarified that if the total income is below the taxable threshold, no tax is payable. It was also confirmed that the basic exemption limit applies to income considered as special income under section 111, including employer contributions and interest.