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- If the amount, which is to be withdrawn as PF is less than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 WORKED IN A COMPANY FOR 5.5 YEARS. EMPLOYER HAS DEDUCTED PF FOR LAST 3.5 YEARS, I HAVE RESIGNED ON COMPLETION OF 5.5 YEARS. AND JOINED OTHER COMPANY WHERE NO PF DEDUCTION. I HAVE WITHDRAWN PF AMOUNTING RS. 251608.00 AFTER 6 MONTHS OF LEAVING PREVIOUS COMPANY.
PF DEPARTMENT HAD DEDUCTED 10% TDS REFLECTING IN 26AS. PLEASE ADVICE THE AMOUNT WITHDRAWN WILL BE ADDED TO MY INCOME OR NOT. CAN I CLAIM FOR REFUND?
REGARDS
KM GANGWAR
I am retired in the month of April 2018. I want to retain the P.F. amount hoping to fetch interest another 3 years even TDS is deducted on interest. I have so far not withdrawn my P.F .at any time. I understand the current P.F.rules does not permit and if I do not withdraw the total amount no interest is paid and it goes to inoperative account.
Please clarify the above is correct. Request for immediate advise.
Regards
I have worked in the company for 2 Years and they terminated my contract because of their poor business. I have PF account and UAN with them. After 6 months I joined another company where I have another UAN. I have not transferred my PF to the new company. Now please let me know
1) Can I have final settlement / withdraw total PF from previous company ? is it taxable since I was terminated and there is a gap of 6 months between these 2 jobs
2) If I resign present company as well and leave both PFs with not joining any other company and withdraw after 58 years what is the Income tax and interest on my pf with both companies.
1) Yes, you can withdraw the PF amount. It will be taxable since the amount is withdrawn before 5 years.
2) In the second case, if you withdraw the amount after 5 years, then no tax liability will occur.
Hi Sir,
I would like to know that my company payroll has been changed, I mean to say that company is still same but payroll changes, in my previous payroll
Pf amount has already been deducted for 4 years my last relieving date is 31oct 2018 and new pf is not merge because of data mismatch problem with the previous pf, and my total pf is 64000 and before this company I had worked for different company for more than 1 year 8 months and I had withdrawn the pf amount ,so my question is my previous 18 month will be add in 4 years or not because previous pf amount I had already withdraw, and many of my friends had withdrawn pf in same company ,they merge both previous and current pay roll but their service are less than me but no amount is taxed, they all get the full amount ,but they had done online, for me please suggest for offline pf withdrawal
I am unable to update my PAN card and my Pf balance amount is around 60k, I already apply online once and was rejected as amount crossed 50k, do I claim it?
Online PF withdrawal is not possible unless KYC (PAN, Aadhar no.) has been done. Contact Department’s helpdesk for issues in updation of PAN.