No tax would be deducted at source for PF withdrawals of up to Rs 50,000 from June 1.
The government has notified raising the threshold limit of PF withdrawal for deduction of tax (TDS) from existing Rs 30,000 to Rs 50,000, a senior official told PTI.
"The Finance Act, 2016 has amended section 192A of Income Tax Act, 1961 to raise the threshold limit of PF withdrawal from Rs 30,000 to Rs 50,000 for Tax Deducted at Source (TDS)," the notification stated.
The provision will come into effect from June 1, 2016, providing relief to subscribers of retirement fund body EPFO.
The government had introduced the proposal to deduct TDS on PF withdrawals in order to discourage pre-mature withdrawal and to promote long term savings.
No TDS in respect of the following cases:-
- Transfer of PF from one account to another PF account.
- Termination of service due to Ill health of member /discontinuation of Business by employer/completion of project/other cause beyond the control of member.
- If employee withdraws PF after a period of five year.
- If PF payment is less than Rs. 50,000/- but the member has rendered service of less than 5 years.
- If employee withdraws amount more than or equal to Rs. 50,000/-, with service less than 5 years but submits Form 15G/15H along with their PAN
TDS will be deducted in respect of the following cases:
If employee withdraws amount more than or equal to Rs. 50000/-, with service less than 5 years, then
a) TDS will be deducted @ 10% if Form-15G/15H is not submitted provided PAN is submitted.
b) TDS will be deducted @ maximum marginal rate (i:e. 34.608%) if employee fails to submit PAN.
Notes:
1. TDS is deductible at the time of payment.
2. TDS will be deducted under Section 192A of Income Tax Act, 1961.
3. Form 15H is for senior citizens (60 years & above) and Form 15G is for individuals having no
taxable income. Form 15G &
15H are self declarations and may be accepted as such in duplicate.
4. Members must quote PAN in Form No.- 15G / 15H and in Form No. 19.
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