I have made contributions to EPF in India under section 80C for saving on taxes. But I read that the money is taxable on withdrawal unless one works for five continuous years.
What if one contributes for one year and then decides voluntarily not to work for the next four years?
Can the EPF account lie idle for an indefinite period of time without contributions being made?
In that case, is the EPF money still taxable at withdrawal after five years from the date the first EPF contribution was made?
If it is, then there is a hidden condition behind the immediate tax savings - namely, that the contributor work for five years, or that they not leave the work force voluntarily.
Given this, would it be better to opt for ELSS under 80C? I believe that for ELSS the first 1 lakh of capital gain per year plus the original invested amount is tax free. Also, one can withdraw after 3 years. Is that right?
I did not see any section pertaining to these issues on the income tax web site. Can someone help?