TDS Applicable on PF Withdrawal w.e.f 1st June 2015
The Finance Act, 2015 (20 of 2015) has inserted a new section 192A regarding the payment of accumulated provident fund balance due to an employee. The provision shall take effect from 1st June, 2015. A copy of the said provision is enclosed for information.
Income Tax shall be deducted at source (TDS) at the following rates if at the time of payment of the accumulated PF balance is more than or equal to Rs. 30,000/-, with service less than 5 years:-
- TDS will be deducted @ 10% provided PAN is submitted. In case Form No. 15G or 15H is submitted by the member, then no TDS shall be deducted.
- TDS will be deducted @ maximum marginal rate (i.e. 34.608%) if a member fails to submit PAN (and no Form No 15G or 15H and Form 19).
TDS shall not be deducted 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/contraction of business by employer, completion of project or other cause beyond the control of the member.
- If employee withdraws PF after a period of five years of continuous service, including service with former employer.
- If PF payment is less than Rs. 30,000/- but the member has rendered service of less than 5 years.
- If employee withdraws amount more than or equal to Rs. 30,000/-, with service less than 5 years but submits Form 15G/15H along with their PAN
For more information , please refer the flow chart and attached circular
Kindly informed all your employees about this amendment and start taking PAN Card along with (PF Withdrawal Form- 19) w.e.f. 1st June 2015
Note: Please note that Form 15G/15H applicable in case there is no taxable income during the current financial year, in case someone declares the wrong information on Form 15G/H then it has legal penal provisions as per Income Tax Act, 1961.