New Rules from June 1, 2015: TDS on Withdrawal of Provident Fund..!

The Finance Act 2015 has Inserted a new section 192A regarding the Tax Deducted at Source (TDS) on payment of accumulated provident fund (PF) balance due to an employee, The provision shall take effect from June 1, 2015 (01.06.2015)

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 (Five) years:-

(a) TDS will be deducted at 10% , provided Permanent Account Number (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 at maximum marginal rate ({i.e. 34.608%) if a member falls 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 member, dis- continuation / or 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 I5G / or 15H along with their PAN.

A flow-chart is appended for understanding the implications of the amended provisions in the income Tax Act 1961.

 

For Larger Image please Click on Image

Kindly take note that TDS is deductible at the time of payment of provident fund in Form No. 19_ Form No. 19. Form no 15H is for senior citizen(60 years & above) while form 15G is for individuals having no taxable income.

Form 15G & 15H are self-declarations and may be accepted as such in duplicate.

Form 15G and 15H may not be accepted if amount of withdrawal is more than Rs. 2.5 lac and Rs. 3 lac respectively.

PF Members shall quote PAN in 15G / 15H forms

15H / 15 G can be submitted if Tax liability of the person is Nil .

Members who have rendered continuous service or 5 years or more, including service with former employer, shall not be required to submit.

PAN and Form No. I5G / 15H. Similarly, Pf members whose service has been terminated due to his/her ill health / contraction or dis-continuance of business of employer or / other cause beyond the control of the member shall not be required to submit PAN , Form No, 15G / 15H .

In such cases, no income tax (IDS) shall be deducted in terms of Rule 8 of Fourth Schedule to the income Tax Act, 1961.

INCOME TAX ACT, 1961 RULE 8 FOURTH SCHEDULE  PART A: RECOGNISED PROVIDENT FUNDS...

Exclusion from total income of accumulated balance,-

The accumulated balance due and becoming payable to an employee  participating in a recognised provident fund shall be excluded from the computation of his /her total income—

(i) if he/she has rendered continuous service with his/her employer for a period of 5 years or more, / or

(ii) If, though he/she has not rendered such continuous service the service has been terminated by reason of the  employee's ill-health, or / by the contraction or / discontinuance of the employer's business or other cause beyond the control of the employee, or

(iii) if, on the cessation of his employment, the employee obtains employment with any Other employer, to the extent the accumulated balance due & becoming payable to him Is transferred to his individual account in any recognised provident fund maintained by such other employer. 

Govt Order

Share: