PF withdrawal tax rules Tax Exemption Provident Fund TDS Calculation

By | May 18, 2017

PF Withdrawal tax rules, Interest rate, Tax Exemptions, TDS Calculation for Provident Fund Withdrawal, Tax Deduction for withdrawal before 5 years

This article is a guide for calculating PF withdrawal tax. If you want to withdraw your EPF amount before 5 years of service, then you have to pay tax on it. Tax deduction will be done for that. There is a tax exemption if you withdraw money after completion of 5 years of your service. Right from its introduction, Employee Provident Fund is popularly a tax-free saving vehicle.

Proposal made for New TDS Rules on EPF is likely to be reviewed after strong protests from trade unions. proposal to tax 60% of PF withdrawal from 1st April 2016 has been currently withdrawn. We have given here new tax deduction on EPF amount. Latest disturbances going on in EPF interest rate and TDS are followed in this post. Check out up to date rules of tax deduction on EPF.

Our site is dedicated to bring all updates related to EPF rules and procedures. This post brings you latest updated rules for tax on PF withdrawal. Now, amount withdrawn from PF account after 5 years of service was fully tax exempted. Government proposed some changes in Budget 2016. In February 2016, Government proposed 60% of tax from employee contribution.

Tax on PF withdrawal will be implemented from 1st April 2016. proposal was strongly protested by opposition, labor unions, and salaried middle class employees. This forced Finance Minister to roll back proposal to tax PF withdrawal after 5 years just over a week. This move was proposed by Government to bring NPS at bar with EPF. 40% of NPS withdrawal on maturity are now made tax-free. If you are a working person, these updates are very important for you. Hence, we have mentioned details of tax on PF withdrawal.

Tax Exemptions on PF Withdrawal

Tax can be charged on PF withdrawal only if both following conditions are present:

  • PF is being withdrawn before minimum period of 5-year service
  • amount is more than Rs. 30,000/-

This means there will be no tax if PF is withdrawn less than Rs. 30,000 even if you are withdrawing it before period of 5 years. You can know your PF status before making any withdrawal. A detailed information on epf balance status enquiry is already covered in previous articles.

There will be no tax at all on PF withdrawal tax after completion of 5 years. Almost all investment schemes come with a minimum period for tax deduction. withdrawal of proposal came as a relief for employees. TDS will be not imposed in any case if EPF amount is claimed before minimum membership period.

TDS Calculation on PF Withdrawal tax before 5 Years

In any case, if you are withdrawing your EPF amount before completing 5 years in service, there will be a deduction of tax. But there are some conditions which allow zero tax on PF withdrawal within minimum lock period. If you want to withdraw PF amount, then you can download pf withdrawal form. Find below criteria depending on which PF amount will be taxed or tax exempted if claimed within 5 years’ service:

No TDS on PF withdrawal at all (before 5 years) in following conditions:

  1. If PF amount is just transferred from one PF account to another.
  2. If employee ended his service due to medical reasons / closure of company by employer / completion of project / other conditions beyond employee’s control
  3. If PF amount is less than Rs.30,000/-
  4. If PF amount is equal to or more than Rs.30,000 but he/she submits PAN and Form 15G/15H

Tax Deduction for withdrawal before 5 years:

  1. Tax on PF withdrawal will be @ 10% if PAN is submitted but Form 15G/15H not submitted (only for amount equal to or more than Rs.30,000)
  2. If no PAN is submitted, tax will be @ 34.608%

Tax on PF will be deducted at time of payment. Form 15H is meant for senior citizens who are above 60 years. Form 15G is meant for individuals without taxable income. It is mandatory to fill in PAN number in Form 15G and 15H.

If you have any confusion regarding tax on PF withdrawal, you can ask you queries. Tax deduction on PF is a major concern for salaried people who leave job. PF rules are updated every year by Ministry of Finance. Your TDS and other challan status are available in case if you are looking for it. In case of any atrocities with your PF withdrawal, you can register your grievance at official EPFO portal.

Visit http://www.epfigms.gov.in/ and click to register your offences. It can be related to PF withdrawal, insurance benefit, transfer of account or any other. Do not forget to check our detailed information on PF withdrawal and EPF rules.