Section 10(11) of the Income Tax Act provides tax exemption on withdrawals from a Statutory Provident Fund (SPF). This applies to government employees and certain recognized institutions.
Key Features of Section 10(11)
- Applies to Statutory Provident Fund (SPF):
- Maintained under the Provident Funds Act, 1925
- Mainly for government employees, railways, universities, and approved institutions
- Fully Tax-Free:
- Both employer & employee contributions + interestare exempt at withdrawal
- No limit on withdrawal amount
- Conditions for Exemption:
- Must be a recognized SPF account
- Applies only at maturity/withdrawal, not during service
- Different from EPF (Employee Provident Fund):
- EPF is covered under Section 10(12), not 10(11)
- EPF has different tax rules (e.g., tax on interest if contributions > ₹2.5L/year)
Examples of Tax Treatment Under Section 10(11)
Example 1: Government Employee Withdrawal at Retirement
Scenario:
- A (a central government officer) retires after 30 years.
- His SPF balance: ₹35 lakh(employee + employer contributions + interest).
Tax Treatment:
- Entire ₹35 lakh is tax-freeunder Section 10(11).
Example 2: University Employee Partial Withdrawal
Scenario:
- B (a professor in a government university) withdraws ₹8 lakhafter 15 years for medical emergency.
Tax Treatment:
- Full ₹8 lakh is exempt(since it’s from an SPF account).
Example 3: Wrong Fund Type (EPF Instead of SPF)
Scenario:
- C (private sector employee) withdraws ₹20 lakhfrom EPF (not SPF).
Tax Treatment:
- Not covered under Section 10(11)(falls under Section 10(12)).
- Tax rules for EPF apply (tax-free if withdrawn after 5+ years).
Comparison: SPF vs EPF vs PPF
| PROVISION | STATUTORY PF (SEC 10(11)) | EMPLOYEE PF (SEC 10(12)) | PUBLIC PF (SEC 10(11A)) |
| Applicability | Govt employees, universities | Private sector employees | Open to all (self-employed) |
| Tax on Withdrawal | Fully exempt | Exempt after 5+ years | Fully exempt |
| Tax on Interest | Exempt | Taxable if contribution > ₹2.5L/yr | Exempt |
| Employer Contribution | Exempt | Exempt up to 12% of salary | N/A |
Key Takeaways
✅ 100% tax-free withdrawal for SPF (government employees)
🏛 Only for statutory funds (not EPF/PPF)
⚠ EPF has different rules (Section 10(12))
💰 No upper limit on exemption amount
