PF Withdrawal rules change: Finance Minister Nirmala Sitharaman has proposed to reduce the amount of TDS deduction from 30% to 20% for EPP of those who do not have PAN Card. However other income tax rules related to this issue will continue as they are now, he said. EPF Withdrawal rules change: Check here new rules.
According to income tax rules, if EPF is withdrawn before 5 years, tax is payable on the total amount. Deposits of more than Rs 2.5 lakh per annum into PF also come under the ambit of tax. Withdrawal from PF or EPF account before the period of five years is taxable.
TDS is not deducted if the PF account holder has a PAN card. Otherwise, Mumbai-based tax expert Balwant Jain said that the PF withdrawal amount will be included in the taxable income of the PF subscriber for that year.
If the PAN is not linked with the PF account, the PF can be deducted from the net amount of the PF account. At present, TDS rate is 30% and it will be reduced to 20% from April 1, 2023, said Balwant Jain. The income tax rules have been significantly revised in the budget and the personal income tax exemption limit has been extended to Rs 7 lakh.
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The Finance Minister also said that this announcement was made under the new tax system and this will be the default tax system. Tax is payable on the excess income. However, in this tax method, there is an opportunity to get tax exemption under various sections of income tax.
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