Employee Provident Fund (EPF) scheme, the main approach is to provide benefit to the employees at the time of their retirement. The EPF scheme specifies that a nominal amount is deducted from the employees’ salary as a contribution towards the fund. Tax on PF withdrawal is the main concern of the employee who leaves the company early.The changes regarding the Income-tax rules on the EPF withdrawal are discussed below.
Employee Provident Fund Organisation or EPFO can deduct tax at source (TDS) only if an employee falls under these two cases:
- If the employee has not completed 5 years of his/her continuous service.
- If the EPF withdrawal amount is more than Rs.50,000. Earlier the limit was Rs.30,000
The government introduces the new Provident Fund(PF) withdrawal rules.They are;
- Withdrawal restrictions
The whole amount in the EPF cannot be withdrawn till the age of retirement. The PF account consists of the contribution made by the employer, a contribution made by employee and interest earned on employer and employee contribution.
The exception to new rule
Female employees are given exemption who is resigning from the services for getting married or due to childbirth or pregnancy. So, they can withdraw the whole EPF Balance.
- Retirement Age
The retirement age is 58 yrs. A person can withdraw up to 90% of PF balance on attaining the age of 57 yrs.
- PF Membership and employment
The membership as an employee would not withdraw the full PF balance till the age of retirement.
This completes our post on Tax on PF withdrawal. If you have any queries regarding this post kindly drop down your queries on the comment section below.