Amendment in Section 192A of the Income Tax Act, 1961 – Deduction of TDS on Withdrawal from Provident Fund
It is informed that the Government of India has inserted a new section 192A through The Finance Act, 2015 (20 of 2015) regarding the payment of accumulated provident fund balance due to an employee. The notification is effective from 1st June 2015. The salient features are as detailed:
Income tax shall be deducted at source (TDS) at the following rates if the accumulated PF balance at the time of payment is more than or equal to Rs. 30,000/- with service less than 5 years:
- 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 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 the member, discontinuation/contraction of business by the employer, completion of a project, or other cause beyond the control of the member.
• If an employee withdraws PF after a period of five years of continuous service, including service with a former employer.
• If PF payment is less than Rs. 30,000/- but the member has rendered service of less than 5 years.
• If an employee withdraws an amount more than or equal to Rs. 30,000/- with service less than 5 years but submits Form 15G/15H along with their PAN.
It is informed that the Government of India has inserted a new section 192A through The Finance Act, 2015 (20 of 2015) regarding the payment of accumulated provident fund balance due to an employee. The notification is effective from 1st June 2015. The salient features are as detailed:
Income tax shall be deducted at source (TDS) at the following rates if the accumulated PF balance at the time of payment is more than or equal to Rs. 30,000/- with service less than 5 years:
- 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 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 the member, discontinuation/contraction of business by the employer, completion of a project, or other cause beyond the control of the member.
• If an employee withdraws PF after a period of five years of continuous service, including service with a former employer.
• If PF payment is less than Rs. 30,000/- but the member has rendered service of less than 5 years.
• If an employee withdraws an amount more than or equal to Rs. 30,000/- with service less than 5 years but submits Form 15G/15H along with their PAN.