TDS on withdrawal of EPF

TDS on withdrawal of EPF (Employee Provident Fund)

U/s-192A with effect form 01st June 2015.

The Finance Act 2015 has Inserted a new section 192A regarding the TDS on payment of accumulated provident fund balance due to an employee, The provision shall take effect from 01st June 2015.

Income Tax shall be deducted at source (TDS) at the following rates, if at the time of payment of the accumulated PF balance is more than or equal to Rs. 30000/-,with service less than 5 years:- 

a) TDS will be deducted @ 10%  , provided PAN is submitted, (In case Form No. 15G or 15H is submitted by the member, then no TDS shall be deducted)

b) TDS will be  deducted @ maximum marginal rate ({.e. 34.608%) if a member falls to submit PAN (and Form No 15G or 15H), 

TDS shall not be deducted In respect of the following cases—

1. Transfer of PF from one account to another PF account. 

2. Termination of service due to ill health of member, discontinuation/contraction of business by employer, completion of project or other cause beyond the control of the member. 

3. If employee withdraws PF after a period of five years of continuous service, including service with former employer. 

4. If PF payment is less than Rs. 30,000/-- but the member has rendered service of less than 5 Years. 

5. If employee withdraws amount more than or equal to Rs, 30000, with service less than 5 years but submits Form I5G/15H along with their PAN.

A flow-chart is appended for understanding the implications of the amended provisions in the income Tax Act 1961. 

Kindly take note that TDS is deductible at the time of payment of provident fund in Form No. 19_ Form No. 19.Form no 15H is for senior citizen(60 years & above) while form 15G is for individuals having no taxable income. Form 15G & 15H are self-declarations and may be accepted as such in duplicate. Form 15G and 15H may not be accepted if amount of withdrawal is more than RS. 2.50,000/- and Rs. 3,00,000 respectively. Members shall quote PAN in 15G./15H 

Note: In our view 15H can be submitted if Tax liability of the person is Nil .

Members who have rendered continuous service or 5 years or more, including service with former employer, shall not be required to submit. PAN and Form No. I5G/15H .Similarly, members whose service has been terminated due to his ill health .contraction or discontinuance of business of employer or other cause beyond the control of the member shall not be required to submit PAN , Form No, 15G 15H . In such cases, no income tax (IDS) shall be deducted in terms of Rule 8 of Fourth Schedule to the income Tax Act, 1961. 

INCOME TAX ACT, 1961

RULE 8 FOURTH SCHEDULE  PART A: RECOGNISED PROVIDENT FUNDS

8. Exclusion from total income of accumulated balance,-

The accumulated balance due and becoming payable to an employee  participating in a recognised provident fund shall be excluded from the computation of his total income— 

(i) if he has rendered continuous service with his employer for a period of five years or more, or 

(ii) If, though he has not rendered such continuous service the service has been terminated by reason of the  employee's ill-health, or by the contraction or discontinuance of the employer's business or other cause beyond the control of the employee, or 

(iii) if, on the cessation of his employment, the employee obtains employment with any Other employer, to the extent the accumulated balance due and becoming payable to him Is transferred to his individual account in any recognised provident fund maintained by such other employer. 

Explanation_—Where the accumulated balance due and becoming payable to an employee participation in a recognised provident fund maintained by his employer includes any amount transferred from his individual account In any other recognised provident fund or funds maintained by his former employer or employers, then, 'in computing the period of continuous service for the purposes of clause (I) or clause (Ii) the period or periods for which such employee rendered continuous service under his former employer or employers aforesaid shall be included. 

Provisions related to TDS on withdrawal from Employee Provident fund Scheme, 1952

No TDS in respect of the following cases:-

1. Transfer of PF from one account to another PF account.

2. Termination of service due to III health of member /discontinuation of Business by employer/completion of project/other cause beyond the contra of member.

3. If employee withdraws FF after a period of five year

4. If PF payment is lei than Rs, 30,1)001- but the member has rendered service of less than 5 years.

5. If employee withdraws amount more than or equal to Rs. 30,000 with service less than 5 years but submits Form 156/151-f along with their PAN

TDS will be deducted in respect of the following cases:

1) If employee withdraws amount more than or equal to Rs. 30000/-, with service less than 5 years, then

a) TDS will be deduced kb 10% if Form-15G/151-1 Is not submitted provided PAN is submitted.

b) TDS will be deducted @ maximum marginal rate (ie. 34.608%) if employee fails to submit PAN.

Notes:

1. TDS Is deductible at the time of payment.

2. Its will be deducted under Section 192A of  Income Tax Act, 1951. Form 15H is for senior citizens (60 years & above) and Form 15G is for individuals having no taxable income Form 15G & 15H are self declaration and may be accepted as such in duplicate.

3. Members must quote PAN in Form No.- 15G or 15H – (Form No 15G and 15H cannot be accepted if amount of withdrawal is more than Rs. 2,50,000/- and Rs. 3,00,000/- respectively)

Thanks & Regards,
Sandeep Jadhav
Tax Consultant & Financial Advisor
Email: sandeepjadhav.co@gmail.com