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TDS on withdrawn of EPF before 5 years & International Employees Exemption

Income Tax - By: - Jugal Patel - Dated:- 14-2-2018 - TDS on Employees Provident Fund withdrawn before 5 years & International Employees Exemption Provident fund is a kind of security fund in which the contribution is made for the employee s welfare by the employee and the employer. Under the Employees Provident Fund Act, 1952, certain specified employers are required to comply with the Employees Provident Fund Scheme, 1952. However, these employers are also permitted to establish and manage .....

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culating 5-year time-limit, service rendered with the previous employer shall be included, if the previous employer also maintained recognized provident fund and the provident fund balance of the employee was transferred by him to the current employer. ■ If the employee has been terminated because of certain reasons which are beyond his control (e.g., ill health of the employee, discontinuation of business by employer, completion of project for which the employee was employed, etc.). σ .....

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s given above), such withdrawal shall be treated as unrecognized provident fund withdrawal. Unrecognized provident fund withdrawal (excluding employee's contribution) is taxable (hereinafter referred to as taxable premature withdrawal ). The Finance Act, 2015 had Inserted a new section 192A regarding the TDS (Tax Deduction at Source) on payment of accumulated provident fund balance due to an employee, the provision shall take effect from 01.06.2015. Who is liable for TDS deduction - Tax is t .....

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4 cases given in above). Out of the lump sum payment, only amount includible in the total income of the employee (i.e. Employer s Contribution & Interest on Employers & Employee Contribution) is subject to tax deduction at source. (refer example given below in conclusion). As the employee s contribution is not income it is set aside amount of Contribution to PF. Also, Employee s Contribution is considered as deduction u/s 80C & when EPF is withdrawn before 5 years of service then suc .....

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n - Tax is deductible at the time of payment. Rate of TDS - Tax is deductible under section 192A at the rate of 10 per cent of taxable premature withdrawal . If PAN of the recipient is not available, tax is deductible at the maximum marginal rate of tax. What is threshold limit - Tax is not deductible if taxable premature withdrawal is less than ₹ 50,000. No deduction of tax at source - No deduction of tax is to be made if the recipient of income furnishes a declaration in writing in dupli .....

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s the social security of their home country and holding Certificate of Coverage (COC) from their home country will not be required to contribute towards the Indian social security. As per the provisions of the PF scheme, both employer as well as employee will contribute 12% of monthly pay (as defined). Salary will include the total salary whether received in India or abroad. Conclusion No TDS in respect of the following cases: - · Transfer of PF from one account to another PF account. &mi .....

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ount more than or equal to ₹ 50,000/-, with service less than 5 years but submits Form 15G/15H along with their PAN. No EPF deduction in case IWs working in India having Social security coverage in their home country & having SSA with India. Example :- Mr. A join Company X on April 16, 2015 (salary being ₹ 1,00,000/- per month. X Company contributed 12% of Salary towards recognised provident fund. Mr. A also makes same contributions. Mr A makes ₹ 1,20,000/- towards LIC u/s .....

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has taken exemption u/s 17 & PF is managed by its PF trust through there own. Assumptions below Mr A is not employed by any other person previously & doesn t have any PF account before this. Mr A is not joining any company after resignation. The service of A is not terminated because of reasons beyond his control. Mr A has not transferred entire Balance of PF to NPS account before 31 Dec 2016 Situation 1 Calculation of TDS TDS by Employer under section 192 TDS by EPFS under 192A Salary ( .....

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