What is Section 192A?
A new section 192A was inserted by the Finance Act, 2015 regarding TDS on payment of accumulated provident fund balance. The Rate of TDS on EPF withdrawal is 10%. There are two components of the Employee Provident Fund:
- Employee’s Contribution: Gets Income deduction u/s 80C
- Employer’s Contribution: Exempt up to 12% of Salary.
- Interest on EPF: Exempt upto 9.5% p.a
TDS on EPF withdrawal shall be deductible only if the following conditions are satisfied:
- The amount from EPF has been withdrawn before completion of continuous 5 years of service, and
- The amount withdrawn is more than INR 50,000.
Rate of TDS
The Deductor is required to deduct TDS @ 10% on withdrawal of EPF. However, if the employee fails to furnish his Permanent Account Number (PAN), then, the Deductor would deduct TDS at the maximum marginal rate.
The Deductor shall deduct TDS at the time of payment of the Accumulated EPF balance due to the employee.
TDS on EPF withdrawal not deductible
TDS shall not deducted by the trustees of the Employees’ Provident Fund or any person authorized under the scheme under the following circumstances –
- If the employee has submitted Form 15G/ Form 15H along with the PAN.
- If there is a termination of employment due to employee’s ill health, completion of the project for which employee was employer, discontinuation of the employer’s business, or any other reason which is beyond the control of the employee.
- The aggregate amount of EPF withdrawal is less than INR 50,000.
- The withdrawal has been done after a continuous service of 5 years.
- In case of a job change, the PF amount is transferred from one account PF account to another.
The Deductor shall deposit TDS with the Government within 7 days from end of the month in which TDS is deducted. However, in the case of TDS deducted for the month of March, the same shall be deposited on or before 30th April. In case of TDS deduction u/s 192A deductor shall file quarterly return in Form 26Q on TRACES within following due dates :
|Quarter||Due Date for Filing Form 26Q|
As per section 206AA, if you do not furnish your Permanent Account Number to the payer (i.e., deductor), then the deductor shall deduct tax at the higher of the following :
1. The Specified rate in the relevant provision of the Act.
2. Rate or rates in force, i.e., the rate prescribed in the Finance Act.
3. At the rate of 20%.
Employee’s contribution gets an income deduction under section 80C. However, if you have withdrawn money from your EPF account, then you are required to report the same by under ‘Section 10(12) Recognised Provident Fund’ from the drop-down menu. Furthermore, withdrawal from PF account will be tax-exempt only if you have completed 5 years of service.