withdrawal of EPF corpus after 5 years of continuous service is fully tax exempt. 2) Rule 8 of Part A of the Fourth Schedule of I T Act provides the circumstances under which withdrawal by an employee is exempt from tax . If employee fulfills any of following conditions, payment from recognized provident fund is tax free : A member of the PF scheme shall be entitled to withdraw the PF amount standing to his credit on retirement from service after attainment of 58 years If the employee has rendered continuous service with the employer(s) for five years or more. If the balance includes amount transferred from the individual’s PF account maintained by previous employer(s), then the years of continuous service rendered to the former employer(s) would be included for the purpose of computing the five-year period. If the employee has not rendered continuous service of five years, but the service is terminated by reason of the employee’s ill health or discontinuance of the employer’s business or reasons beyond the control of the employee, the amount will be tax-exempt. Another tax-exempt case is when, on the cessation of the employment, the employee finds another job and the the accumulated PF balance is transferred to his individual PF account maintained by the new employer.