Often people withdraw money from their PF account when needed, but they are not aware of the tax on it. EPFO deducts TDS on withdrawals against the rules or in excess of the prescribed amount. Therefore, it is very important for you to know the math of its tax before withdrawing money.
new Delhi. Many times you have to pay tax on withdrawing your PF money from Employees’ Provident Fund Organization (EPFO). Although the investment made in it is tax free, but TDS (Tax Deduction at Source) is charged on the withdrawal made without following the rules.
Usually TDS is deducted on withdrawal of PF account within 5 years of opening, but apart from this there are many occasions when you have to pay TDS. We are telling you under which circumstances you can avoid TDS deduction, when you will have to pay tax.
TDS will not be deducted in these circumstances
- On transfer of amount from one PF account to another.
- On the death of the employee, termination of service due to illness or withdrawal after leaving the company.
- On withdrawal of money after 5 years of account opening.
- If less than 50 thousand is paid from PF account.
- TDS will not be deducted even on withdrawals made by submitting Form 15G/15H with PAN.
Here you have to pay tax
- If 50 thousand or more amount is withdrawn within 5 years of account opening, then 10% TDS will be deducted.
- If PAN is not given at the time of PF withdrawal, then TDS will be deducted at the rate of 34.60 percent.
- TDS can be deducted even after giving Form 15G/15H on earning more than 2.5 lakhs annually, if the withdrawal is more than 50 thousand.
