PF Withdrawal: The government has now decided to reduce the TDS rate on the taxable portion. EPF withdrawal rate has been reduced from 30% to 20% in non-PAN cases.
EPFO Withdrawal New Rule: While presenting the Union Budget 2023, Finance Minister Nirmala Sitharaman has revealed a reduction in the tax deduction (TDS) rate on Employees Provident Fund (EPF) withdrawal for non-PAN holders. The government has now decided to reduce the TDS rate on the taxable portion. EPF withdrawal rate has been reduced from 30% to 20% in non-PAN cases. This reduction in the amount of tax deducted from EPF withdrawal is expected to help salaried individuals whose PAN is not updated in the records of the Employees’ Provident Fund Organization (EPFO).
The Income Tax Act states that if a PF account user withdraws money from his EPF before five years of account opening, then the entire amount of withdrawal and any PF contribution in excess of Rs 2.5 lakh per year will also be taxed. Tax on income from a previous year can sometimes be deducted later, even if it was paid in the previous year. An amendment was proposed to make it easier for these taxpayers to avail credit for this TDS in the previous year.
TDS certificate required to claim refund
According to a Money9 report, if the beneficiary is a non-filer, ie, has not submitted his return of income for the previous year, and the sum of TDS and TCS is Rs 50,000 or more, then the higher TDS/TCS rate is applicable. it occurs. After deducting TDS by EPFO, the taxpayer receives a certificate. One needs to include this TDS certificate with his Income Tax Return (ITR) to claim any refund due.
Notably, an EPF account holder can submit Form 15H or Form 15G to ensure that no TDS is deducted from the withdrawal from the EPF account. Explain that within five years of the establishment of the account, TDS is deducted from the EPF withdrawal.
20% tax will be charged if PAN is not linked
If PAN is on file with EPFO, the percentage of TDS deducted is 10% if the withdrawal amount exceeds Rs.50,000. The TDS rate used to be 30%, but is now 20% for withdrawals in case PAN is unavailable or not linked to the PF account. If you intend to withdraw money from an EPF account which is not linked to PAN, you will have to wait till April 1, 2023, when the new requirements will come into effect in the new financial year.