As per latest update After Budget 2016-17, the previous EPF withdrawal limit of Rs 30,000 is now raised up to Rs 50,000. Means if you withdraw your EPF balance after June 1st 2016, you will not be charged TDS on withdrawal amount of Rs 50,000 or less.
When someone leave an organisation either he/she has to withdraw EPF or transfer EPF balance to new organisation. Till date there is no taxation rule applied while withdrawing your EPF money. But from this June 1st 2016, a new epf tds deduction rule has been applied for withdrawing of EPF balance more than 50,000 & when someone has not continued for 5 year. The previous epf withdrawal balance limit for TDS was rs 30,000 which is raised after Budget 2016-17. For more details, please refer EPFO website.
What is EPF TDS circular on balance withdrawal
The rule is not that simple as various cases come into picture where people are confused whether to pay TDS or not. In this article I will try to answer all such FAQs related to new EPF withdrawal TDS rules.
Who has to pay TDS on EPF balance withdrawal?
The simple thumb rule is your withdrawal balance. If you withdraw 50,000 or more within 5 year of your service, then you have to pay TDS.
How To Avoid TDS on EPF Withdrawal
There are 2 cases to address this query.
- If you have submitted your PAN number while withdrawing EPF money, you have to give 10% TDS. But in case you have submitted 15G / 15F form then there will be no TDS.
- In case you have not submitted your PAN number, a higher TDS @34.608 % will be applicable.
Who need not to pay TDS on PF money withdrawal?
There are few cases in which one doesn’t have to pay TDS. These are
- If you transfer your PF money from one account to another PF account.
- In case you quit your job or career due to bad health or any medical reasons, you will not be liable to pay TDS.
- In case your previous employer got shut down or their business got discontinued, you will not be responsible to pay any TDS on EPF money withdrawal.
- If your EPF balance is less than 50,000, If you applied for withdrawal after completion of 5 years & if you have submitted 15 G/ 15 H form.
What is 15 G and 15 H form and why should one submit them?
These forms are for declaring your interest income from your investments, in case they combined with your net yearly income, doesn’t exceed the min income tax exemption limit. Form 15 G is for senior citizens & form 15 H is for individual or HUF.
But there is an upper limit to use this 2 forms. In case your withdrawal balance is more than Rs. 2,50,000/- and Rs. 3,00,000/, 15G and 15H will not be accepted respectively. This limit is decided every year as per the income tax slab.
Can NRI claim use these forms to get TDS exemption?
No, NRI can not submit form 15 G.
I have served more than 5 years, Do I have to fill form 15 G/ 15 H?
If your job is continuing for more than 5 years then you are not liable to show PAN number & form 15 G / 15 H while filling EPF withdrawal forms.
As per the rules, I think I don’t have to pay TDS. Does it mean my EPF withdrawal is tax free?
No. Interest earned on your EPF money will be considered as your taxable income. And you have to pay income tax as per current income tax slab, if you withdraw your PF balance before the expiry of five years of continuous service.
Do you have any more query regarding the new TDS rules related to EPF withdrawal? Are you facing any issue while calculating EPF taxation? Share your query & experience about this topic.