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Instructions for deduction of TDS on witdrawal of Provident Fund – Section 192A of the IT Act 1961

The Finance Act, 2015 has inserted a new section 192A regarding the payment of accumulated provident fund balance due to an employee. The provision is effective from 1st June 2015.

Please find below taxability/non taxability on withdrawal of Provident Fund:

 

No TDS in respect of the following case TDS will be deducted in respect of the following cases
If employee withdraws PF after a period of five year. If employee withdraws amount more than or equal to INR 30,000/- with service less than 5 years:a) TDS will be deducted @ 10% if Form 15G/15H is not submitted provided PAN is submitted.
b) TDS will be deducted @ maximum marginal rate (i.e. 34.608%), if employee fails to submit PAN.
If PF payment is less than INR 30,000/- but the member has rendered service of less than 5 years.
If employee withdraws amount more than or equal to INR 30,000/- with service less than 5 years but submits Form 15G/15H along with their PAN.
Transfer of PF from one account to another PF account.
Termination of service due to ill health of member/discontinuation of Business by employer/completion of project/other cause beyond the control of member.

 

Further also note the following points:

  1. TDS is deductible at the time of payment.
  2. TDS will be deducted under section 192A of Income Tax Act, 1961.
  3. Form 15H is for senior citizens (60 years & above) and Form 15G is for individuals having no taxable income. Form 15G & 15H are self declarations and may be accepted as such in duplicate.
  4. Members must quote PAN in form no. 15G/15H and in form No. 19.

Form Nos. 15G and 15H cannot be accepted if amount of withdrawal is more than INR 2,50,000/- and INR 3,00,000/- respectively.