EPFO tax rules: If a member withdraws from EPFO before five years, then this amount is taxable. TDS is also deducted after making more than 50 thousand withdrawals.
Does the EPFO discriminate against its weak and needy subscribers? Things changed in the Corona era in such a way that questions are being raised about the withdrawal rules from EPFO. Employee Provident Fund Organization is the only social security program in India. According to a report quoted by EY in the Times of India, the EPFO rule is more strict for those who are more needy.
Millions of people lost their jobs during the Corona period. In the time of crisis, people withdrew money from the Provident Fund for financial help. The government also asked the EPFO to make the evacuation process easier and faster, which was also implemented. According to EPFO rules, if a subscriber withdraws money from this fund after 5 years, then it is tax free. He does not even have to pay TDS nor is this amount included in taxable income. If, before five years, an employee is fired due to his health, the company is closed or he leaves his job due to any reason which is beyond the control of the employee, then even under this circumstance, PF withdrawal is not taxed. is. If an employee has designed, then this withdrawal is taxable.
When is tax levied on PF withdrawal
If money is withdrawn from this fund before five years of service (contribution), then it is taxed. Tax is calculated in two ways. If the withdrawal amount is below 50 thousand then TDS will not be deducted, but the withdrawal amount will be calculated in his income and he will be taxed accordingly, in the tax bracket in which the contributor falls. If the withdrawal amount is more than 50 thousand then TDS is deducted. TDS is cut by 10% if PAN card details are updated.
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No tax on advance withdrawal
In order to help the people financially during the Corona period, the government had given advance withdrawal facility. Under this, an employee can withdraw the basic salary of three months and dearness allowance or 75% of the total amount deposited in the PF fund, which will be less in both. In the FAQ issued by Provident Fund, it was clarified that such withdrawal will not attract any tax. However, so far no announcement has been made by the Income Tax Department.
Tax charged on withdrawals before 5 years
In other countries, when someone is unemployed, he gets many facilities from the government. In India, if you withdraw money from a PF fund for 5 years, it becomes taxable. The government has passed the labor code. It is believed that from April 1, 2021, it will be implemented across the country. In such a situation, it is possible that the government should make the PF withdrawal tax free. There is no condition involved with it.
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