Based on the provident fund norms, 12% of the salary of an employee goes into the funds along with the matching contribution from employers. The EPFO or Employees’ Provident Fund Organization has been taking a lot of steps to ease the provident fund money withdrawal process. The provident fund money can be withdrawn after 2 months from the employment’s cessation. The application form may be filed with provident fund authorities or through employers. Provident fund is meant to save towards retirement years.
Below are some of the facts that you should know:
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If a worker has been terminated due to some reasons beyond her or his control, the withdrawal doesn’t attract any tax, regardless of the employment years.
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To encourage the long-term savings, the government created tax laws accordingly. If withdrawal from the recognized provident fund happens after 5 years of continuous employment, this attracts no tax liability. In terms of employment with some employers, if the balance of provident fund maintained with an old employer is transferred to the new employer’s PF account, it’s considered as a continuous employment.
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In case of withdrawal before 5 years, the amount will be taxable in the same financial year. Therefore, the amount should be shown in the tax return for next assessment year. The contribution of employer to provident fund and the earned interest on it is added to the income and will be taxed accordingly.
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The transferred funds from a recognized PF account to NPS or National Pension System account won’t attract any tax, PFRDA or Pension Fund Regulatory and Development Authority said in the circulated that was dated on the 6th of March.
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Tax Deducted at Source or TDS. Once the withdrawal is after the period of 5 years of continuous employment, this attracts to any tax or no TDS. If PAN hasn’t been submitted to the authorities of EFPO, there’s 30% deduction on TDS. If PAN was submitted along with the Form 15G or 15H, there’s no TDS deducted. But, if the form isn’t submitted and PAN was submitted, TDS will be deducted with ten percent. Form 15G or 15H is basically meant to prevent TDS for people whose income falls below taxable limit.
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In addition to that, no other documents would be needed to be submitted by subscriber to take advances from the PF corpus. A PF subscriber may go for partial advance or withdrawal from her or his corpus for particular purposes including education of children, marriage, construction, purchase of flat, and so on.
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For the subscribers who are to seed bank details and Aadhaar, a new composite for was introduced that has to be submitted with the employer’s attestation for any claims.
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Moreover, the EPFO subscribers may submit the new 1-page form directly to retirement fund body without the attestation of employer if their accounts were seeded with the bank account details and Aadhaar.
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The EPFO comes out with a form for PF related claims from pension or provident fund withdrawal to advance facility.
Posted by Randy Blakeslee – GetnSocial
