Please find below the summary of the circular detailing the amendments issued by office of the Central Provident Fund Commissioner on applicability of changes in Finance Act 2015 ( insertion of section 192A regarding the taxation on withdrawal of PF Accumulations). Provisions of the said circular shall take effect from 1st June 2015. The gist of the circular is being given here under-:
1. Hither to fore no income tax was deducted on the PF accumulations refunded by the PF authorities on the members leaving employment of their employers.
Consequent upon amendments carried out through the Finance Act 2015, effective from 1st June 2015, Income tax will be deducted by the PF Authorities at the time of payment of PF accumulations to the members in the following cases-;
Where the payment of accumulated PF balance is more than or equal to Rs. 30,000/-, with service less than five years TDS will be deducted @ 10% provided PAN is submitted but where the members fails to submit the PAN the TDS will be deducted @ maximum marginal rate i.e. 34.608%.
3. TDS shall not be deducted in the following cases-:
· Transfer of PF from one account to another PF account.
· Termination of service due to ill health of member, discontinuation/contraction of business by employer, completion of project or other cause beyond the control of the member.
· If employee withdraws PF after a period of 5 years of continuous service , including service with former employer.
· If PF payment is less than Rs 30,000/- but the member has rendered service of less than 5 years.
· If employee withdraws amount more than or equal to Rs. 30, 000/-, with service less than 5 years but submits Form 15G/15H along with their PAN.
· Form 15G and 15H may not be accepted if amount of withdrawal individual and senior citizen (60 years and above) is Rs. 2, 50,000/- and Rs. 3,00,000/- respectively. For format for Form 15G/15 H please refer attached document.
Form 15H is for senior citizens ( 60 and above) while Form 15 G is for individuals having no taxable income.
Note: The provisions of the circular will not apply to PF Trust of relaxed/exempted establishments to whom provisions as contended Rule 8 ,fourth schedule, Part A- Recognised Provident Funds shall continue to apply.(Extracts already enclosed with the attached circular ).