Provident fund withdrawal on dormant account - will i be charged income tax as i worked less than 5 years in company A?

Hello Community Members,

I joined an organization A in December 2010 and left it in August 2014. In August 2014, I joined organization B. I gave a transfer request of my PF accumulation from the PF account of A to the PF account of B. It was done by mid-2015. To my surprise, I just checked that EPFO has not transferred the full amount, but there is still 20-25% left in that account. After 2016, I received no interest on that and I am not getting any option for online transfer of this amount to my existing company (probably it is dormant). I have two queries:

- If I withdraw this amount, will I be charged income tax as I worked less than 5 years in company A?

- Will I get the interest on this amount as it was due to EPFO mistake, and it was not transferred earlier?

I have opened multiple grievances, but no appropriate reply is provided. They are just saying the amount was transferred without checking any detail. I opened RTI, but again got no response.

Any appropriate response from the community members will be highly appreciable.

EPFO is bound to pay interest. When you withdraw balances, TDS will be deducted.

Please let me know if you need further assistance.

But as this is an old account, do I still come under TDS?

Dear Harry,

Please refer to the attached EPFO Circular dated 21.05.2015 regarding the Amendment in Section 192A of the IT Act, 1961 - Instructions for the deduction of TDS on withdrawal from PF. The exemption limit has been increased to Rs. 50,000/- from the earlier limit of Rs. 30,000/-

Regards,
Suresh

1. If I withdraw this amount, will I be charged income tax as I worked less than 5 years in Company A? If the amount is above Rs. 50,000, tax is deducted at the rate of 10% if you have provided a PAN number and at the highest rate if no PAN details are given. However, if you provide Form No. 15G or H as applicable, no tax will be deducted.

2. Will I get the interest on this amount as it was due to EPFO mistake and was not transferred earlier? Interest on the balance is credited by EPFO every year as per the statutorily declared rate. You are eligible to get interest up to the previous month.

3. Grievances: Have you utilized online grievance mode or offline? You need to escalate the grievance if it is not addressed. Generally, EPFO responds to the grievance immediately. However, it could be due to the lockdown situation, causing a delay. Kindly follow up regularly online with your grievance.

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I have corrected the spelling, grammar, and punctuation errors in your text while ensuring proper paragraph formatting. Let me know if you need further assistance.

If the A/C is more than 3 years old, then it may not be eligible for interest after 3 years. Please check it.

Dear Harry,

EPFO, upon submitting a transfer application in Form 13, transfers the PF accumulations lying in the PF Account to the new company where the PF member has joined. When transferring the PF accumulations, EPFO sends Annexure K to the new employer, furnishing the details of the Employee's and Employer's contributions and interest separately.

You may request your employer to provide you a copy of Annexure K. Generally, EPFO also forwards a copy of Annexure K to the PF Member by post, which you can cross-verify with the annual account statement of 2014-15 received by you through the EPFO office. If you notice any discrepancies or figure mismatches between the statement and Annexure K, write a letter to the Regional PF Commissioner and bring it to their attention.

Generally, transfers and withdrawals do not happen together; however, if it is a departmental mistake, they may allow you PF withdrawal. Please note that EPFO does not deduct any TDS on the transfer amount. Previously, there was no TDS on PF withdrawal up to 31st May 2015. It has been made applicable from 1st June 2015 for settlement amounts greater than 30K and membership of less than 5 years.

Conclusion:
1. TDS is not applicable.
2. If a short transfer is made erroneously, you should receive the amount along with interest, provided you present your case strongly and convey to them the irresponsibility of their staff and that your grievances have not been addressed.
3. INR 50K for TDS exemption has been enhanced for over 2 years.
4. No interest for dormant accounts exceeding 2 years is not applicable to you as it is EPFO's mistake.

Hope your query is answered in detail.

Suresh