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.
2. 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:-
3.
a) 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.
b) 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).
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
A flow-chart is appended for understanding the implications of the amended provisions in the Income Tax Act, 1961.
From India, Mumbai
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32. 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:-
3.
a) 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.
b) 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).
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
A flow-chart is appended for understanding the implications of the amended provisions in the Income Tax Act, 1961.
From India, Mumbai
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While the EPF organisation is gearing up to implement TDS provisions, the Government of India is having second thoughts.
Refer to this link: [Taxing premature PF withdrawals of over Rs 30k may be kept in abeyance - The Economic Times](http://economictimes.indiatimes.com/wealth/savings-centre/savings-news/taxing-premature-pf-withdrawals-of-over-rs-30k-may-be-kept-in-abeyance/articleshow/47379054.cms)
From India, Pune
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Refer to this link: [Taxing premature PF withdrawals of over Rs 30k may be kept in abeyance - The Economic Times](http://economictimes.indiatimes.com/wealth/savings-centre/savings-news/taxing-premature-pf-withdrawals-of-over-rs-30k-may-be-kept-in-abeyance/articleshow/47379054.cms)
From India, Pune
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Pressures against TDS being made applicable for PF withdrawals:
Unions question TDS on PF withdrawals, want order on hold | Latest News & Updates at Daily News & Analysis
All decisions have to be thoughtful and seen in totality. IT may want to show a boost in revenue collections, but pressures are there from affected parties.
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Unions question TDS on PF withdrawals, want order on hold | Latest News & Updates at Daily News & Analysis
All decisions have to be thoughtful and seen in totality. IT may want to show a boost in revenue collections, but pressures are there from affected parties.
From India, Pune
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This is one of the bad decision of the Modi Government , social security go to hell. Regards Naresh
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From India, Pune
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Dear Naresh Ji,
Could you please tell us why you feel that this is one of the bad decisions of the Modi Government? Your insights will provide information on this new section 192A.
From India, Mumbai
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Could you please tell us why you feel that this is one of the bad decisions of the Modi Government? Your insights will provide information on this new section 192A.
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Decision for TDS is controversial to some extent because the general feeling is that salaried people are squeezed from all directions in the tax net. When businesses have so many loopholes to evade and escape, salaried people are subject to maximum scrutiny, though the potential for tax is almost fully exploited. Potential for increasing tax exists without doubt from business people and that is being left unaddressed by IT. That could be the reason why people are feeling bad about TDS on PF withdrawal.
From India, Pune
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From India, Pune
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1. Sir, in the present day of high prices, the working class, including government employees, are generally living with serious economic strains and limitations. Therefore, I fully agree with the opinion of Mr. Naresh that the current government has made a bad decision.
2. In the coming days, as per newspaper reports, I believe the government will completely abolish the concept of social security. There will be no provident fund, no ESI. Employees, whether working in the organized sector or the unorganized sector, will be left at the mercy of the employer or the Almighty regarding issues such as sickness, invalidity, old age, etc. The guiding factors for the current government do not seem to be the policies of the ILO or the concept of a welfare state. Instead, in the present situation, they seem to strictly adhere to the concept of a free economy, laissez-faire policy, hire and fire policy, and the World Bank.
From India, Noida
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2. In the coming days, as per newspaper reports, I believe the government will completely abolish the concept of social security. There will be no provident fund, no ESI. Employees, whether working in the organized sector or the unorganized sector, will be left at the mercy of the employer or the Almighty regarding issues such as sickness, invalidity, old age, etc. The guiding factors for the current government do not seem to be the policies of the ILO or the concept of a welfare state. Instead, in the present situation, they seem to strictly adhere to the concept of a free economy, laissez-faire policy, hire and fire policy, and the World Bank.
From India, Noida
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Amendment in Section 192A of the IT Act, 1961- Instructions for deduction of TDS on withdrawal f.pdf
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