Employees' Provident Fund (EPF) - Exemptions and Tax Deductions

EPF is withdrawn before 5 years 

On the off chance that you withdraw from EPF before finishing 5 years of constant service, TDS will be deducted. In computing 5 years of service, your tenure with the past employer is additionally included. In the event that you transfer your EPF balance from the old employer to another employer and your absolute work is 5 years or more, no TDS is deducted. Do recollect that you should calculate the specific 5 years, there is no grace in the event that you are short by a couple of days. 

Temporary employee for some piece of 5 years 

Let's assume you have been recruited for a temporary position or you are on contract for a certain period. During this period you are not on perpetual rolls and the employer isn't obligated to contribute towards your EPF. After some time, you are welcomed on rolls and the employer starts your EPF commitment. You leave in the wake of finishing 5 years. In any case, this period incorporates the months when you were not on lasting rolls and thus the employer will deduct TDS from your EPF withdrawal since 5 years are not finished. 

Your EPF is an unrecognized EPF 

A fund which isn't endorsed by Commissioner of Income Tax, is viewed as an unrecognized provident fund. It might have been perceived by official of provident fund or some other proper power. Yet, for a fund to appreciate income tax cuts of a perceived gave fund (where withdrawals are excluded following 5 years) it must be affirmed by a magistrate of income charge. On the off chance that you are an individual from URPF, your withdrawals are burdened, regardless of whether you have finished 5 years of service. Our tip: It assists with checking with your employer about the status of your EPF. 

How are withdrawals burdened 

Your EPF payout has 3 segments. 

a) Your commitment/employee's commitment 

b) Interest on your/employee's commitment 

c) Employers commitment and interest on employer's commitment 

a) Your commitment/Employee's commitment – This is the sum contributed by you to your EPF. This segment of your withdrawal isn't available. Notwithstanding, in the event that you have asserted derivation under area 80C on your commitment in prior years, you may need to pay extra expense as though 80C was not guaranteed by you for those years. 

b) Interest on your/employee's commitment – This segment is burdened as income from different sources. 

c) Employer's commitment and interest on employer's commitment – Employer's commitment and interest on it is completely available. It is burdened under the head compensation in your expense form. At the point when TDS is deducted on it, you are probably going to see a section under pay TDS in your Form 26AS for it. 

Rates of TDS 

TDS is deducted @ 10% on EPF balance whenever withdrawn before 5 years of service.Remember to make reference to your PAN at the hour of withdrawal. On the off chance that PAN isn't given TDS will be deducted at most noteworthy section pace of 30%. 

You can submit Form 15G/Form 15H if charge on your complete income including EPF withdrawal is nil. TDS isn't deducted if Form 15G/Form 15H is submitted. 

How to evade (avoid) TDS on EPF withdrawal? 

Here are a couple of methods of evading TDS on EPF withdrawal: 

• At the point when you change occupations, do whatever it takes not to withdraw the EPF sum and transfer it to the new record at your new organization. 

• In the event that you can concede withdrawing funds from your record for a very long time (constant service with all employers), withdrawals from there on won't draw in any TDS. 

• On the off chance that withdrawal sum is not as much as Rs 50,000, no TDS is deducted.