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Tax on PF Withdrawal: New PF Withdrawal rules

TDS on PF Withdrawal FlowchartTDS on PF Withdrawal Flowchart

The approach behind the Employee Provident Fund (EPF) scheme is to provide significant benefit to the employees at the time of their retirement. The scheme specifies that a nominal amount is deducted from the salary of an employee as a contribution towards the fund. According to the latest circular, which has got affected from June 1, 2015, changes have been made regarding the Income-tax rules on the EPF withdrawal by one of the biggest retirement funding associations worldwide, Employee Provident Fund Organization (EPFO).

(Update: Budget-2016)

Payment of an accumulated balance to pay an employee from PF, the threshold limit increased from Rs. 30,000 to limit Rs. 50,000. So, TDS is not applicable if PF withdrawal amount is less than Rs 50,000.

PF Withdrawal Rules associated with TDS

Cases where TDS is not applicable

Cases where TDS is applicable

When accumulation is more than Rs. 30000 Rs. 50,000 and the employee i.e. the EPF member has worked less than 5 years, then two cases are there:

 

Flowchart: TDS on EPF Withdrawal

 Some other important key points:

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