How to save tax on Employee Provident Fund?

Employee Provident Fund Tax Implication 

The contributions made in EPF are tax excluded. This fund falls under the EEE Exempt-Exempt-Exempt taxation system. This implies no tax is imposed at the hour of contribution, gathering of intrigue and withdrawal at the hour of development on the off chance that it is inside a particular breaking point. Nonetheless, there are rules and special cases to be checked. 

Employer Contribution 

Employer's contribution towards EPF is tax excluded up to a specific cutoff. According to the new spending plan 2020, it has proposed another breaking point towards the employer's contribution. 

According to the new proposition, the employer's contribution to EPF, National Pension Scheme and superannuation fund on a total premise ought not surpass Rs.7.5 lakh in the budgetary year. Assume, in the event that the total sum surpasses as far as possible, at that point the extra sum is taxable in the involved employee. 

Employee Contribution 

Employee's contribution towards EPF and intrigue is excluded from tax. One can guarantee tax deduction under section 80C up to a furthest reaches of 1.5 lakhs. In the event that the sum from PF is pulled back at development, at that point no tax must be paid. Nonetheless, assume the employee pulls back any fractional sum because of any crises. All things considered, the sum will be taxable to the employee. 

Tax on Withdrawal 

EPF balance withdrawal is viewed as without tax. According to the standard, there are sure exemptions dependent on the quantity of long stretches of business. 

Prior to five years 

Assume the employee has not finished a successive five years of administration. All things considered, the sum pulled back is taxable in the possession of the employee in the time of receipt. The sum may remain sans tax in the accompanying two special cases. 

Initially, if the work is fired because of an employee's infirmity, the employer has stopped its business or some other explanation behind withdrawal which is outside the ability to control of the employee. In such a situation, the EPF sum pulled back before five years of business is viewed as without tax in the possession of the employee. 

Also, assume the employee changes his employer in under five years. All things considered, the employee can move his PF account balance for the current employer to the new employer. For this situation, the PF balance remains without tax. 

Subsequently, it is consistently suggestible to move the PF balance while changing positions to stay away from any taxation. 

Following five years 

Assume the employee has finished a back to back five years of administration. All things considered, the sum pulled back is without tax in the possession of the employee in the time of receipt. 

Something else 

Assume the EPF withdrawal sum is under Rs.50,000 before finish of 5 years of administration, in such occurrences. All things considered, the individual needs to pay tax on the EPF withdrawal sum on the off chance that he falls in the taxable bracket(based on this tax piece rate). 

Assume the EPF withdrawal sum is more than Rs.50,000 before finishing of 5 years of administration, in such examples. All things considered, TDS (Tax Deducted at Source) is deducted. On the off chance that PAN card is outfitted, at that point 10% TDS is charged. In the event that PAN card isn't submitted, at that point TDS is at the most extreme negligible tax rate. In any case, No TDS if Form 15G/15H is submitted. 

EPF Withdrawal 

Consistently a specific sum is stored in the PF account. This sum continues acquiring interest and structures an enormous corpus. Toward the finish of the business, a generous sum is gathered in the EPF account to assist a person with meeting their monetary needs during their retirement period. 

At the point when an individual resigns at 58 years old, 100% of the corpus can be pulled back. In the event that an individual has achieved an age of 54 or over, one can pull back 90% of its EPF corpus before one year of its retirement. Despite the fact that EPF is viewed as a retirement investment funds scheme, funds can be pulled back if there should be an occurrence of specific exemptions. 

Untimely Withdrawal on a crisis 

Untimely PF withdrawals are likewise permitted in the event of budgetary crises. One can withdrawal simply following a time of 5 years of finishing of administration. In the accompanying models where one can profit fractional withdrawal: 

• Wedding 
• Advanced education 
• Acquisition of a land/house 
• Health related crisis 
• House credit reimbursement 
• Remodeling a lodging property 
• Withdrawal because of joblessness 

EPF withdrawal is likewise accessible in the event of joblessness while evolving occupations. In the event that an individual leaves for its job and stays jobless for a month, one can pull back 75% of its PF corpus to meet its costs. On the off chance that an individual stays jobless for over two months, at that point one can pull back the equalization EPF sum. On account of joblessness, this element can be utilized whenever. One need not hang tight for the finishing of a specific number of years for withdrawal of EPF sum. 

Consequently, these withdrawals can be asserted through the diverse composite structures that are accessible on EPFO e-entryway.

What are the documents needed for EPF registration?

• ID Proof (Aadhar Card/ PAN Card)
• Bank Account number and IFSC Code
• Voluntary Application