10% Tax Proposed on PF Withdrawals

10% Tax Proposed on PF Withdrawals

The Employee Provident Fund Organization (EPFO) has decided to impose a tax of 10.3% on the amount withdrawn from the EPF within five years of starting the accounts.

EPF accounts have to be created in all the concerns that employ more than 20 workers, with salaries of Rs.6,500 and Rs.15,000 per month. 12% of their salaries are deducted and are deposited into the PF account each month. The company contributes an equal amount to the account. 10.3% tax shall henceforth be imposed if the employee retires within five years of starting the account, or if he quits his employment with one company and joins another company, or if he decides to reclaim the amount in the EPF account.

If the annual EPF payment exceeds Rs.30,000, he has to produce his PAN card number. If the employee doesn’t have a PAN card or if he fails to submit the PAN details, he will not be given the amount in the account. About 90% of the EPF scheme (or nearly 8.5 crore people) do not have PAN Card details.

Those who do not have PAN cards shall have to pay the maximum taxable percentage of 35% on the amount that is due to them. Those who are reclaiming their PF money after five years won’t have to pay any taxes.

Source: CGEN.in