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
- If the amount, which is to be withdrawn as PF is less than
Rs. 30000Rs. 50,000. - No tax on pf Withdrawal after 5 years or more of continuous service.
- If an employee withdraws an amount of more than or equal to
Rs. 30000Rs. 50,000 before 5 years but submits Form 15G /15H along with his / her PAN. - When a transfer of PF is from one A/c to another A/c.
- Being an EPF member, if the service has been terminated due to ill-health and he withdraws his accumulation (balance).
- If the employer discontinues the business or any cause beyond the control of EPF Scheme’s member (Employee).
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:
- Deduction of TDS will be at 10% if PAN is submitted, but 15G/15H Forms are not.
- Deduction of TDS will be at maximum marginal rate i.e., 34.608% if PAN is not submitted.
Flowchart: TDS on EPF Withdrawal
Some other important key points:
- If the subscriber has submitted all the required forms, then he/she will get an exemption from TDS with no taxable income.
- TDS will be deducted under Section 192A of Income Tax Act, 1961 and it is deductible at the time of payment.
- Form 15G and 15H are self-declarations and may be accepted in duplicate.
- If the amount of withdrawal is beyond 2,50,000 or 3,00,000 respectively, then Forms 15G and 15H cannot be accepted.
I have 84k Pf amount I submitted all documents through online. PF withdrawal also requested through online but my pan says not verified. may I know the how much TDS will deduct and it is credited to My TDS account or not?
As per the provisions of the TDS Act, the rate of deduction is 10 percent on the submission of the Permanent Account Number (PAN). Deduction of TDS will be at maximum marginal rate i.e., 34.608% if PAN is not submitted. Yes, it will be reflected in 26AS.
I have worked in a private company for 4 years where my pf was getting deducted and i have another 3 lakh rs of accumulated pf balance. Now I have taken up another job where the employer is not deducting pf. When can i withdraw my accumulated pf balance and will it be taxable ? Should I leave it with the PF organisation for 1 year so that 5 years is completed and then apply for withdrawal? Please advice
After how many days of resignation full amount of pf can be withdrawn?
Kindly help for same
The EPF members cannot withdraw full PF amount before attaining the age of retirement. The maximum withdrawal on cessation of employment cannot exceed an amount aggregating employee’s own contribution and interest accrued thereon. You can withdraw your contributions + interest portion only. The employer’s portion can be withdrawn after attaining the retirement age
I have worked in a private company for 2yrs. Where pf was cpf. After that I join a state govt firm which is under gpf scheme. So it is mandatory to withdraw my cpf from the last company. Now I want to know whether this money is taxable or not.
I have completed 12 years of service in the same company. Now, if I have plans either to quit job permanently or shift to other job, can I withdraw entire PF amount per latest tax rules. Heard that Employer PF and interest cannot be withdrawn. Please advice