Introduction
Individuals frequently require an influx of cash. People with no other options may decide to withdraw from their EPF accounts prematurely in such circumstances. They must, however, check Section 192A of the Income Tax Act before initiating such a withdrawal.
Section 192A of the Income Tax Act Addresses Tax Deducted at Source on an amount withdrawn from an Employees’ Provident Fund account.
● This Section allows EPF trustees to deduct tax at the point of payment when employees fail to meet the conditions specified in Rule, Part A of the Fourth Schedule.
● Individuals can find specific guidelines for deducting TDS from withdrawal amounts, as well as other important information, in the following section.
Who must deduct TDS under Section 192?
Employers are required to deduct applicable TDS under Section 192 of the Income Tax Act of
1961. Individuals, local governments, Hindu Undivided Families (HUFs), Association of Persons
(AOPs) or Body of Individuals (BOIs), partnership firms, co-operative societies, trusts,
companies (public and private), and any artificial judicial person are all examples of employers.
According to the provisions of this section, the presence of an employer-employee relationship is required. However, when calculating and deducting the applicable TDS, the employer status and the number of employees are irrelevant.
When Does TDS Deduction Under Section 192A Apply?
Entities recognised under the Employees’ Provident Fund Scheme that qualify to pay the accumulated fund to employees may deduct TDS in the following circumstances:
When a provident fund account has a balance of more than 30,000 at the time of withdrawal, TDS will be deducted. Furthermore, an individual has worked for a company for less than 5 years. When an employee transfers provident funds from an old PF account to a new PF account. This situation occurs when he or she changes jobs.
Section 192A of the Income Tax Act applies when an employer fires an employee due to physical illness. Other reasons include the termination of a business venture or project on which the employee was working, among others.
When an employee withdraws funds from his or her PF account after five years of consistent service. When an individual withdraws less than 30,000, Section 192A of the Income Tax Act applies. Furthermore, he has less than 5 years of corporate work experience. When the total withdrawal amount exceeds 50,000, the threshold limit for TDS deduction applies.
What Is the TDS Deduction Amount and What Is Its Maximum?
To qualify for TDS deduction, a single lump sum tax component must exceed Rs. 50,000. Any amount less than this will not be eligible for TDS deduction. However, there are a number of other circumstances in which TDS deduction under Section 192A of the Income Tax Act does not occur. Individuals and entities must be aware of the available exceptions in order to account for it.
Exceptions in accordance with Section 192A
Here are some examples of when TDS is not deducted as required by Section 192A of the IT Act:
● If the total amount of EPF withdrawal does not exceed Rs. 50,000
● If an employee changes jobs and the EPF amount is transferred to a different account than the previous one, if the withdrawal of EPF occurs after at least 5 years of continuous service If employees submit their PAN card along with Form 15H or 15G,
● TDS deduction does not occur if an employee is terminated due to the non-completion of a project. Furthermore, a specific employer’s exit from the venture falls under such circumstances.
● Employees who have worked for a specific organisation for more than 5 years are exempt from submitting a PAN card when withdrawing from the provident fund. As a result, they can avoid creating the aforementioned forms at that time.
● Furthermore, individuals who lost their jobs due to the discontinuation of their employer’s business, illness, or incomplete submission of their assigned projects do not need to submit a PAN card.
The distinction between sections 194A and 192
● Section 194A deals with TDS provisions on interest other than interest on securities. If a resident receives interest, TDS must be deducted under this section.
● These provisions do not apply to non-resident interest, which is governed by Section 195.
● Section 192, on the other hand, deals with the TDS deducted by employers on the salary paid to employees at the time of payment. TDS is deducted regardless of whether the salary is paid in advance or in arrears.