Update – May 2016 – No tax would be deducted at source for PF withdrawals of up to Rs 50,000 from June 1 2016. https://wealth18.com/no-tds-for-pf-withdrawals-of-up-to-rs-50000/
In Budget 2015, new Section 192A of Income Tax Act is proposed to deduct tax (TDS) on PF withdrawal before 5 years.
To discourage premature withdrawal of provident fund by subscribers, Union Finance Minister Arun Jaitley has proposed a tax deduction on such early closures. Under the proposed tax law (new Section 192A of Income Tax Act), provident fund withdrawal before five years of continuous service will attract a TDS (tax deducted at source) of 10%.
Changes Proposed (new Section 192A is proposed under Income Tax Act)
- TDS will be deducted if the withdrawal is more than Rs.30,000.
- If the PAN is updated, TDS will be deducted @ 10% of the withdrawn amount.
- If the PAN is not provided, then tax will be deducted at the maximum marginal rate which means tax rate applicable to highest slab tax payers, approx 35 %.
- If the person gives declaration that he do not have any taxable income by filing Form 15G or Form 15 H, then also no Tax will be deducted.
- TDS on Provident Fund withdrawal will be deducted only if the withdrawal is made before 5 years of continuous service. If the withdrawal is done after 5 years, TDS will not be deducted
- The provisions will be applicable from 1st June 2015.
View/ Opinion / Feedback
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