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- If the amount, which is to be withdrawn as PF is less than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 had been employed with a firm and got UAN(1), when I left I withdrew my PF too and that UAN(1) closed[Duration of working – 2 years] if the 2nd company I got UAN(2) when I left and joined 3rd company that UAN(2) was carried forward [Duration of working in 2nd and 3rd company combined is 3.5 years]. Under my PAN, only UAN(2) is showing. So:
1. do I fall under Less than 5 years of service and hence have to fill Form 15G (as every time I applied they are asking me to fill from 15G).
2. If Yes, then the total estimated Income for PY should be PF amount + Approx Salary?
Need help with these 2 questions.
Is TDS applicable on the whole amount of Employers share, Employees Share & even Pension amount if it reaches 50000/-
Or it is applicable only when the employer & Employees share is more than 50,000/-
Please clarify this doubt.
Please clarify Question
I worked for a company for 4 years (Jyly 2011 – June 2015) and I have one UAN(1) for this. Currently, I am working with another company for the last 4 yrs and 7 months(July 2015 – current) and here I have new UAN(2). Also, the account/EPF transfer of the previous company was not done yet.
Now I want to withdraw my full EPF from the previous company – UAN(1). The reason for leaving service is mentioned as “CESSATION (SHORT SERVICE)” for UAN(1). The combined EPF amount is more than 4 lacks. My question is here if TDS will be applicable for the withdrawal. if yes, then is it on the total amount or just on interest received.
Withdrawals of PF before completion of 5 years of continuous service are subject to tax. Withdrawals after completion of 5 years of continuous service in the EPF are tax-free. So if you withdraw the PF amount before the completion of 5 continuous years of service, the principal amount, as well as the interest accrued, is subject to tax.
Sir, I worked for an MNC company for the period of 14 years and during this period PF contributions were contributed continuously. Then I resigned the job and remained jobless for the period of six months (No PF contributions). Then, I re-joined the same company as a consultant (contractor) and a fixed PF amount is contributed every month after creating a new account. Employer is suggesting to transfer old PF amount to new account (of course same UAN ). But this contract is only for 24 months! So my questions:
1. Is it good to transfer old PF amount to new account? If yes, when I withdraw after 24 months, is there any TDS? ( please note 6 months gap between two jobs).
2. I am 49 years old and can I withdraw all components of PF (my share+Employer share+pension amount)?
Please advice,
Thanks
Legally an employee should transfer his PF account to a new company when he changes his job. Yes, You can transfer Old PF account to new one simply through online process.
If you want to withdraw PF amount and if you have completed 5 years of continuous service in single or multiple companies, you are eligible to withdraw PF amount and the return are tax-free. As you completed 14 years service so you can withdraw PF amount and it will be tax-free.
If you withdraw PF amount after 24 months, treatment will be the same and withdrawn PF amount will be tax-free because you have completed 14 years of continuous service.
Sir,
I have the following Queries-
1) can UAN number be generated for Old In-operative Account for year 2007-2008 ?
2) How can I get Date of Joining and Date of Leaving details if my Ex-employer is lost.
3)If I Physically Visit Regional EPFO , The process of My Name correction if required may resolve in one day?
4) How can I follow up for above process and check the progress?