No tax would be deducted at source for PF withdrawals of up to Rs 50,000 from June 1.
The
government has notified raising the threshold limit of PF withdrawal for
deduction of tax ( TDS ) from existing Rs 30,000 to Rs 50,000, a senior
official told PTI.
"The
Finance Act , 2016 has amended section 192A of Income Tax Act, 1961 to raise
the threshold limit of PF withdrawal from Rs 30,000 to Rs 50,000 for Tax
Deducted at Source (TDS)," the notification stated.
The
provision will come into effect from June 1, 2016, providing relief to
subscribers of retirement fund body EPFO .
The
government had introduced the proposal to deduct TDS on PF withdrawals in order
to discourage pre-mature withdrawal and to promote long term savings.
According
to existing provisions, TDS is deducted at the rate of 10 per cent provided PAN
is submitted.
TDS
will be deducted at the rate of 10 per cent provided PAN is submitted.
However,
in case Form 15G or 15H is submitted by the member, then TDS is not deducted.
These forms are to declare that their income would not be taxable after
receiving payment of their PF accumulations from retirement fund body
EPFO.
While
Form 15H is submitted by senior citizens (above 60 years of age), Form 15G is
submitted by claimants below the age of 60 years.
TDS
is deducted at the maximum marginal rate of 34.608 per cent if a member fails
to submit PAN or Form 15G or 15H.
However,
there are certain exceptions to deduction of TDS by EPFO. TDS shall not be
deducted in case of transfer of PF from one account to another PF
account.
Also,
no tax is deducted if employee withdraws PF after a period of five years.
