The Employee Provident Fund initiated by the Employee Provident Fund Organization (EPFO) is a savings scheme granted after retirement. It is also identified as PF (Provident Fund) which is available to salaried groups or individuals. This savings scheme for which a fixed rate of interest is imposed is endorsed by the Government of India. The statutory council administered by the Ministry of Labour and Employment aims to contribute towards the provident fund saving scheme for every employee or employer.
Imposition of tax on goods and services is a way adopted by the government to collect revenue from the masses. This revenue is in turn used to execute programs and schemes.
EPF (Employees Provident Fund) is yet another aspect covered by form 15G. Being an employee in a corporate setup, you will be qualified to seek EPF in accordance with the acts stated by the constitution. This was granted in alignment with the Miscellaneous Provisions Act of 1952 and under the prime project of Employees’ Provident Funds (upheld and governed by the EPFO).
Why is it Essential to Fill Form 15G for PF Withdrawal: Explained
Form 15G is a self-acknowledged statement proposed by both the employees and employers. The form intends to display the annual income in a financial year of salaried personnel to be less than the threshold income tax slab.
As per the mandate, Indian citizens whose age is less than 60 years, are eligible to fill 15G form for EPF validation.
The prime reason to submit form 15G is to evade the imposition of tax deduction at source on PF withdrawal. Since the individual is also liable to bear the fixed interest deposit on PF, he can simply avoid it by filling this form as a legal measure. According to the EPF withdrawal rules mentioned in section 193A of the Indian Finance Act, 2015, the relation between TDS deduction and 15G provisions are laid out.
Since you are now aware of the terms between the tax deducted on EPF withdrawal, take a look at when the tax is applicable.
- As per the provision conferred by the government, an individual is liable to bear Tax Deducted on Source (TDS) on PF withdrawal. However, conditions apply: if your income is above ₹50,000 earned between the time duration of 5 years or below, then TDS is applied. By the year 2016, the threshold limit was increased from INR 30,000 to INR 50,000.
- 10% tax deducted at source is cut back on PF if the personnel submits the PAN card.
- However, if the PAN card is not submitted by the employee, then 34.6% TDS will be imposed mandatorily.
When the tax is not levied on EPF withdrawal
- If an individual transfers his EPF account to another account.
- If the PF amount is withdrawn by the employee after completing 5 years in service.
- If the employee is sacked or terminated from the service due to multiple reasons like health, contract, etc.
- TDS is not deducted when the EPF amount is below the threshold limit of ₹50,000 and the service years are not more than 5 years.
- Compiling all the above-mentioned points, when the employee withdraws the EPF amount of ₹50,000 or more and also submits the form with a PAN card, TDS is not deducted.
Click here to know more about form 15G provisions.
Form 15G will help you sail through the EPF withdrawal process with no imposition of TDS. If you fulfill all the criteria professed by the administrative body, you can fill in the form via., the Unified Member Portal. By submitting this form you will be free from the heavy taxes and save more for the upcoming days.