TDS limit for EPF withdrawals raised to Rs 50,000 from June 1
The government has issued fresh notifications regarding the rules which preside over the provident fund corpus formed under the EPFO, Employee Provident Fund Organization. The government had proposed some changes to the various rules on EPFO during its budget 2016 presentation.
Objective of Launching New Policy
The main focus of the proposed amendments to the Finance Act 2016 was to deter people from pulling out their money from the EPFO corpus. This would have given the government more liquid assets to work with. The proposal put forth during the budget presentation had laid a limit of Rs. 30000 to be the amount that an individual could withdraw from their own EPF without attracting any TDS (tax deducted at source) penalty.
This was vociferously opposed by various sections of the public and the government was forced to re-think on the proposals. The new notification which comes into force from 01 Jun 2016 has the following rules regarding EPF.
Below listed table illustrate the basic facts about TDS policy followed in India with detailed information.
|S.No||Facts about TDS||Detailed Information|
|1||What is TDS?||TDS – Tax Detectable Service is an amount paid by each and every individuals from their incomes|
|2||TDS applicable which types of Incomes?||As per the government rules, money earned as salary by employees, and money earned as interest on individuals bank deposits, bonds and all other sort of incomes even from Provident Funds comes under the TDS|
|3||Is there any limit on those incomes for TDS?||Yes! Government fixed threshold limits for TDS on incomes. However, threshold limits would get various according to the types of income individual receive.|
|4||Relaxation in TDS on Employment Termination||TDS – Will exempt for employees who got terminated from their due to ill health or termination of Contract or any other reason which are beyond the individuals or workers control.|
|5||Whether TDS is applicable if an employee prefers PF account shifting?||No, There won’t be any TDS for transferring PF amount from one account to another.|
Some of the Rules Implemented in New TDS policy
- The EPF withdrawal amount has been raised to Rs. 50,000 without any TDS being levied for the amount.
- The EPF withdrawals which are carried after 05 years of service would fall under this preview of no TDS.
- For those who withdraw from the EPF within 05 years of their service and have submitted their PAN details along with Form 15G/ 15H, they too would be exempted the levy of TDS for the withdrawal.
- For employees who have not submitted their form 15G/ 15H as well as those who have not submitted their PAN details, a TDS at the rate of 10 percent would be levied for all withdrawals up to Rs. 50,000 also.
- There is also the rule that transfer of PF from one account to another would not levy any TDS. As also when employment of an employee is terminated without control of the employee, then also TDS would not be levied.