Know About TDS Liabilities On Final PF Settlement

EPF withdrawals are taxable in some cases and exempt in others, according to the Employees' Provident Fund Organisation (EPFO). The regulations are also relevant to TDS on withdrawals from the Employees Provident Fund Scheme, which was established in 1952. TDS (Tax Deduction at Source) becomes applicable generally if an EPFO member withdraws EPF or PF balance before 5 years from the date of account establishment. But first, let's figure out when PF is influenced by TDS and when it isn't, as well as how TDS can be avoided.

When TDS is not applicable?

TDS is not applied to a member's PF account in a variety of circumstances. According to epfindia.gov.in (official portal of EPFO), no TDS is applied in the following situations:-

• In the event that a member transfers his or her PF from one account to another.
• Termination of service due to Ill health of member /discontinuation of Business by employer/completion of project/other cause beyond the control of the member or employee.
• If an employee withdraws the PF amount after five years of employment.
• If PF payment is less than Rs. 50,000/- but the member has rendered service of less than 5 years.
• If an employee withdraws an amount more than or equal to Rs. 50,000/-, with service less than 5 years but submits Form 15G/15H along with their PAN.

When TDS is deducted from PF account?

TDS will be deducted under Section 192A of the Income Tax Act, 1961, and is deductible at the time of payment, according to EPFO. If an employee withdraws more than or equivalent to Rs. 50000/- with less than 5 years of continuous service, TDS will be deducted at a rate of 10% if Form-15G/15H is not filed but PAN is. If an employee fails to provide a PAN, TDS will be deducted at the maximum marginal rate (34.608 percent). If the withdrawn PF amount is more than Rs 50,000, TDS is applied if the yearly income is more than Rs 2.5 lakh, which is the taxable category. If the yearly income of the holder of a PF account is less than Rs 2.5 lakh, TDS can be avoided by filing Form 15G or 15H. Even if the withdrawal amount is higher than Rs 50,000, the PF account holder becomes eligible for TDS relief by filing and submitting Form 15G or Form 15H.

How can TDS be avoided?

To avoid TDS on withdrawals, elderly citizens (60 years and older) must file and submit Form 15H, whereas people with no taxable income must file and submit Form 15G. In Form No. 15G / 15H and Form No. 19, members must include their PAN. The Income Tax Department's official website has Form 15G/15H available for download. You can fill and submit the forms using the EPFO-Unified Portal.

For more details please click here: How To Avoid TDS On EPF Withdrawal?