PF New Rule: Provident fund withdrawal must pay tax! Center for new rules on TDS –

PF New Rule: While presenting the recent Budget 2023 in Parliament, Union Finance Minister Nirmala Sitharaman said that the 30 percent deduction in Tax Deduction at Source (TDS) enjoyed by individuals belonging to the Employees’ Provident Fund (EPF) Scheme will be reduced to 20 percent from now. According to the rules of Income Tax, if a person withdraws money from that account within 5 years of opening the EPF account, then tax is applicable on that amount. Apart from this, the contribution of Provident Fund (EPF) above 2.5 lakh rupees per annum will also be taxable according to Union Finance Minister Nirmala Sitharaman.

Mumbai’s tax expert Balwant Jain said that if a person withdraws money within 5 years of opening the EPF account, that money is taxable. Besides, Provident Fund (EPF) contributions above Rs 2.5 lakh per annum are also taxable. However, if the EPF Account is linked with the Pan Card number of that person, then Tax Deduction at Source (TDS) is not available in that case. As a result, money received from EPF account is also subject to income tax as per Income Tax Slab. Balwant Jain also said that if the EPF Account is not linked with the person’s Pan Card number. In that case, Tax Deduction at Source (TDS) is fixed based on the entire amount in that account. TDS currently stands at 30 percent which is set to change from FY 2024. In fact, from 1 April 2023, the amount of TDS is being increased to 20 percent.

Some information about EPFO

EPFO is one of the statutory social security organizations under the Ministry of Labor and Employment, Government of India. It operates basic pension schemes and a disability or death insurance scheme. It also administers social security agreements with other countries. International workers are covered under the EPFO ​​scheme in countries where bilateral agreements have been signed. As of May 2021, there are 19 such agreements. Its apex decision-making body is the Central Board of Trustees, a statutory body established by the Employees’ Provident Fund and Miscellaneous Provisions (EPF&MP) Act, 1952. As of 2018, the organization is managing over Rs 11 lakh crore.

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