Section 192A
Section 192A: TDS Rules on EPF Withdrawal
What is Section 192A?
The Finance Act 2015 brought in Section 192A to control TDS on early withdrawals from the Employees Provident Fund. As per this rule, TDS will be cut if the employee does not meet the conditions mentioned under Rule 8, Part A of the Fourth Schedule of the Income Tax Act.
The TDS has to be deducted when making the payment and then paid to the government within the given time. In most cases, TDS should be deposited within one week of the following month. For deductions made in March, it must be deposited by April 30.
When is Section 192A Applicable?
Section 192A of the Income Tax Act, 1961, applies when an employee receives the accumulated amount from their Employees’ Provident Fund (EPF) account. It is relevant for TDS purposes on such withdrawals.
Rate of TDS on Provident Fund
As per section 192A of the Income Tax Act 1961, TDS on PF withdrawal is charged at 10 % if you have given your PAN. If you submit Form 15G or Form 15H saying your total income is below the taxable limit, then no TDS will be cut.
TDS will also not apply in these cases:
- Suppose you have completed more than five years of continuous service. In this case, PAN is not required, and no TDS will be deducted under section 192A.
- If your job ends due to reasons like health issues, the company shutting down, or the project getting over. Here too, TDS will not be deducted even if PAN is not submitted, as per section 192A.
Exemption under Section 192A
Section 192A of the Income Tax Act says that TDS will be deducted on early EPF withdrawals. But there are some situations where no TDS is charged. These are the main cases:
- If your total EPF withdrawal is up to ₹50,000, TDS will not be cut, no matter how long you have worked.
- If you have completed at least 5 years of continuous service, no TDS will be deducted even if the withdrawal amount exceeds ₹50,000.
- If you are shifting to a new job and simply transferring your EPF balance from the old PF account to the new one, TDS does not apply since it is not a withdrawal.
- If your job ends for reasons beyond your control, such as health issues, project completion, or the company shutting down, TDS will not be deducted from your EPF withdrawal.
- If you submit Form 15G or Form 15H along with your PAN and your total income is below the taxable limit, no TDS will be taken.
- Also, make sure all required documents and forms are submitted to your employer or the EPFO on time, so you do not face higher TDS due to missing details.
Knowing these points helps you plan your EPF withdrawal better and avoid unnecessary TDS.
How Employees Can Avoid TDS Deduction
Employees can follow a few easy steps to avoid TDS on EPF withdrawals under section 192A:
- If you have completed five years of service, either in the same company or through continuous job changes, no TDS will be deducted.
- When you switch jobs, it is always better to transfer your EPF balance instead of withdrawing it, so that it does not count as a premature withdrawal.
- If your total income for the year is below the taxable limit, you can submit Form 15G if you are below sixty years or Form 15H if you are above sixty years, along with your PAN, to stop TDS from being cut.
- Also make sure all required documents and forms are given to your employer or the EPFO on time, so you do not face a higher TDS because of missing details.
Conclusion
Section 192A of the Income Tax Act helps ensure that any early withdrawal from your EPF is taxed correctly. If you understand the rules under this 192A TDS section, you can plan your EPF withdrawals better, avoid extra tax, and stay compliant with the law. Whether you are taking out your PF money because you changed jobs or are retiring, knowing the TDS rate and the situations where TDS does not apply will help you make the right decision.
With that, we have come to the end of this post. If you have any questions, please post them in the comments section below. We will be happy to help.
FAQs
Q. Where should I show income under 192A in my ITR?
Ans: Your own EPF contribution can be claimed under Section 80C. If you have taken out money from your EPF, you need to show it under the option ‘Section 10(12) Recognised Provident Fund’ in the return. The amount will stay tax-free only when you have completed 5 years of service.
Q. How much EPF interest is tax-free?
Ans: As per the rule from Budget 2021, the interest you earn on your EPF is tax-free only up to your own yearly contribution of INR 2.5 lakh. If you put in more than that in a year, the interest on the excess amount becomes taxable, and TDS will also be deducted on it.
Q. Is TDS cut on every EPF withdrawal?
Ans: No, TDS is deducted only when your EPF amount exceeds Rs.50,000, and you have not completed 5 years of continuous service.
Q. Is TDS cut on EPF withdrawals after 5 years?
Ans: No, if you have completed 5 years of continuous service, your EPF withdrawal is not taxable, and no TDS will be deducted.
Q. How much TDS is cut if I don’t give my PAN?
Ans: If you don’t share your PAN, the TDS will be cut at a higher rate of 34.608%.
