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- If the amount, which is to be withdrawn as PF is less than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.
Hi,
I had worked 2 years 6 months service with my previous employment and then transferred the PF amount to current employment. Now, 2 years 5 months services are completed in the current employment and I am still working in the current company.
My question is, Shall I withdraw the PF amount (employee’s share) from current company PF account as 5 (2.6+2.5) yrs are completed?
If is it possible, any TDS will be deducted and what %?
Kindly advice.
Thanks,
Selvam
As you have not yet completed 5 years of service, so if you withdraw any amount from PF a/c exceeding Rs. 50000 will attract TDS @ 10%.
I had completed 5 years 5 months service with my previous employment and changed my job in May 2017. Previous employment PF balances not transferred to new employment PF account.
I would like to know:
-whether TDS applicable on previous employment (5+ years) PF balance withdrawal? or
-is it advisable to transfer previous employment PF balances to new PF account and then withdraw?
-any other suggestion is appreciated.
Thanks
TDS will not be applicable if you continuously serve for 5 years.
I have completed 10 years of service in the same company. Now I have quit the job and not joined any other company. Now I want to withdraw PF, Can I withdraw entire PF amount? Is TDS applicable even working more than 5 years? kindly advice
If PF amount is withdrawal after 5 years, then TDS will be deducted.
I have 18 lacs pf accumulated (employee + employer portion). I have completed more than 5 years of service.
If I withdraw PF will I have to pay
1) Pay TDS during withdrawal and/or
2) At the time of filing return (being treated as an Income)?
I am in financial crisis and needs the fund very badly.
Request a kind response from a fellow member here on site
I shall be grateful to get a response.
Regards
I have withdrawn my PF and pension amount online after 5 years of service (starting from May 2012) recently. In this 5 years, I have worked in 2 companies with a gap of just 5 days in joining the next company. I have received my pension amount in full as specified in the PF passbook i.e Rs.1,38,000 but when I applied for pension withdrawal there was a reduction in an amount by Rs. 6,937 (I received Rs. 42,575) where the actual amount in PF passbook was Rs. 49,512. Is there a TDS? Do I need to raise a complaint? Please comment.
As per sec 192A, TDS will be deducted from the withdrawal of PF amount exceeding Rs. 50000/-