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No TDS for PF withdrawals of up to Rs 50,000

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The government has now changed the rule on  TDS deduction on PF withdrawal. Now, no tax would be deducted at source for PF withdrawals of up to Rs 50,000 from June 1 2016. So no TDS if your withdrawal is upto Rs 50000.

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.

Earlier in the budget, 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.

Current Applicable provisions

  • TDS shall not be deducted in case of  1) if employee withdraws PF after a period of five years  2) transfer of PF from one account to another PF account.
  • TDS is deducted at the rate of 10 % provided PAN is submitted (if the amount is above threshold).  If the member fails to provide PAN or Form 15G/H,  TDS is deducted at the maximum marginal rate of 34.608 % 
  • If the total income would not be taxable after receiving payment of their PF accumulations , then the member can submit Form 15G / 15H and no TDS will be deducted. Form 15H is submitted by senior citizens (above 60 years of age), Form 15G is submitted by claimants below the age of 60 years.

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The author is a Chartered Accountant and loves to write about Personal Finance, Wealth Management, Taxation etc. Disclaimer - The articles on this website is for informational and knowledge purposes and should not be treated as financial advice, Please consult your financial advisor before taking any investment decision.

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