Income Tax – PF Withdrawn before 5 years of Continuous Service Taxable

Income Tax – PF Withdrawn before 5 years of Continuous Service Taxable – Provident fund withdrawals before five years of completion of service will attract tax deducted at source (TDS) at 10 per cent.

The income tax rules on provident fund withdrawal from Employees Provident Fund Organisation (EPFO) have changed from June 1, 2015. With more than Rs. 6 lakh crore of assets from nearly 8 crore subscribers, the Employees Provident Fund Organisation (EPFO) is one of the world’s largest retirement fund body.

Here is a 10-Point Cheat-Sheet

1) Provident fund withdrawals before five years of completion of service will attract tax deducted at source (TDS) at 10 per cent.

2) If the accumulated provident fund balance is less than Rs.30,000, TDS would not be applicable.

3) TDS will be deducted at 34 per cent if subscriber fails to submit PAN.

4) Exemption from TDS has been given to subscribers with no taxable income, provided they submit the required forms.

5) Two avoid the levy of TDS, Form No. 15G (other than senior citizens) or 15H (for senior citizens) can be submitted, provided the provident fund amount payable is up to Rs.2,50,000 and Rs. 3,00,000 respectively.

6) Form No. 15G or 15H are self-declaration forms that can be furnished by individuals to state that their income is below the taxable limit.

7) TDS shall not be deducted in case of transfer of provident fund from one account to another.

8) TDS will not be applicable in case of “termination of service due to ill health of member, discontinuation / contraction of business by employer or other cause beyond the control of the member,” the retirement fund body said.

9) In case of withdrawal after five years or more of continuous service, no TDS would be applicable.

10) For computing the period of continuous service, the period of previous employment can also be included, if the accumulated balance while at previous employer is transferred to provident fund of the new employer.

Source: Financial Express