Greetings to All,
As per your queries, EPFO has issued a new circular relating to applicability of TDS (Income Tax deduction at Source) on EPF withdrawals. These new provisions was effective from 1st June, 2015. TDS is applicable on EPF withdrawal where accumulation (balance) is more than Rs 30,000(New limit is Rs. 50,000/-) and the EPF member (Employee) has worked less than Five years.
(Budget 2016-17 Latest update: In case of payment of accumulated balance due to an employee in EPF, the TDS limit is being raised from Rs 30,000 to Rs 50,000. So, TDS is not applicable if the PF withdrawal amount is less than Rs 50,000. This new TDS thresh-hold limit was effective from 1st June, 2016 onwards. (Click on the below image to download EPFO’s latest notification on this new amendment.)
As per EPFO’s circular, “the Finance Act, 2015 (20 of 2015) has inserted a new section ‘192A’ regarding the payment of accumulated provident fund balance due to an employee. The provision was effective from June 1, 2015.”
EPF Withdrawals – Provisions related to TDS
TDS is not applicable in the following cases;
• On Transfer of PF from one account to another PF account (EPF A/c) .
• On Termination of service due to ill-health of EPF member and withdraws his/her accumulation.
• On discontinuation of Business by the Employer or any cause beyond the control of EPF Scheme’s member (Employee).
• If PF withdrawal amount is less than Rs 30,000 /-(New limit is Rs 50,000/-).
• If employee withdraws amount more than or equal to Rs. 30,000 /- (New limit is Rs 50,000/-), with service less than 5 years but submits Form 15G /15H along with his / her PAN.
TDS is applicable in the following scenarios;
• If employee withdraws amount more than or equal to Rs.30,000 /- (Rs 50,000), with service less than 5 years, then:
a) TDS will be deducted @ 10% if Form-15G/15H is not submitted provided PAN is submitted.
b) TDS will be deducted @ maximum marginal rate (i.e., 34.608%) if employee fails to submit PAN.
Regards,
Manoj S