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States exempting a portion of pension income include: Arkansas, Colorado, Delaware, Georgia, Hawaii, Iowa, Kentucky, Louisiana, Maine, Maryland, Michigan, Missouri, Montana, New Jersey, New Mexico, New York, Oklahoma, South Carolina, Utah, Virginia and Wisconsin.
As the total period of service is less than five years, withdrawal of accumulated PF balance shall be taxable in the financial year (FY) of withdrawal. Merely holding the PF balance for more than five years will not absolve the tax implications. The aggregate of employerâs contribution to PF and interest earned on it is taxable as salary. To the extent of the deduction claimed under section 80C on your contribution, it shall be taxed as salary. Also, the interest earned on your contribution shall be taxed as âincome from other sourcesâ.