Zee Media Bureau
New Delhi: In a move that would provide major relief to subscribers of retirement fund body EPFO, the government has decided no tax would be deducted at source for PF withdrawals of up to Rs 50,000 from June 1.
The threshold limit has been extended from Rs 30,000 to Rs 50,000 of PF withdrawal for TDS.
"The Finance Act , 2016 has amended section 192A of Income Tax Act, 1961 to raise the threshold limit of PF withdrawal from Rs 30,000 to Rs 50,000 for Tax Deducted at Source (TDS)," the notification stated.
The provision will come into effect from June 1, 2016.
The government had introduced the proposal to deduct TDS on PF withdrawals in order to discourage pre-mature withdrawal and to promote long term savings.
According to existing provisions, TDS is deducted at the rate of 10 per cent provided PAN is submitted.
TDS will be deducted at the rate of 10 per cent provided PAN is submitted.
However, there are certain exceptions to deduction of TDS by EPFO. TDS shall not be deducted in case of transfer of PF from one account to another PF account.
Also, no tax is deducted if employee withdraws PF after a period of five years.
With PTI inputs