Employees Provident Fund Organization– EPFO earlier issued a circular relating to TDS applicability on PF withdrawals (Tax deduction at Source) effective from 1st June, 2015. TDS is applicable on EPF withdrawal where PF Balance is more than Rs 30,000 and the PF member (Employee) has PF service less than 5 years.
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 shall take effect from June 1, 2015.”
In Budget 2016-17 government has decided to increase the limit from Rs 30,000 to Rs 50,000. 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. EPFO has now approved this by issuing a circular. New limit will be effective from 01st June, 2016.
Circular: PF Withdrawal TDS Amendment
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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 with effect from 01st June, 2016).
- If employee withdraws amount more than or equal to Rs. 30,000/- (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. 30000/- (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.
Pf Withdrawal Complete Guideline