Section 192A of Income Tax Act : TDS on EPF Withdrawal

Section 192A of Income Tax Act

Section 192A of the Income Tax Act is related to TDS or Tax Deducted at Source on premature withdrawals from PF. This is a comparatively newer addition to the existing income tax rules. It was added on June 1, 2015 in accordance with the recommendations of the Finance Act 2015. According to this section, the deduction of tax must be made before the amount withdrawn from an Employee’s Provident Fund (EPF) account is transferred to the employee. The rule further underscores that the tax deducted at source in a particular month  must be deposited with the government by entrusted deductors within a week into the next month.

Section 192A TDS Deduction Limit

Section 192A of the I-T Act, 1961 states that no tax will be deducted at source if the total amount withdrawn from an EPF account is less than or equal to ₹50,000. Any amount exceeding this limit will be taxed as per the existing rules. We have discussed the exemptions allowed under this rule in detail in a later section.

Trivia Corner

Did you know that the tax exemption limit for premature EPF withdrawals was increased from ₹30,000 to ₹50,000 in 2016? This was achieved through an amendment to the section introduced by Finance Act 2016.

Rate of TDS u/s 192A on PF Withdrawal

Section 192A of the Income Tax Act, 1961 states that upon premature withdrawal of Employee Provident Fund, an employee is liable to pay a TDS of 10%. However, if the employee is unable to furnish their PAN details, then tax will be deducted at source at the maximum marginal rate of 34.608%. 

Another important point to consider is that if an employee provides Form 15G and 15H, then TDS will not be deducted on the EPF withdrawal as per the provisions of section 192A. Let us now look at some exemptions provided under section 192A of Income Tax Act.

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Exemption Under Section 192A

The following are some probable scenarios in which TDS will not be deducted as per the provisions of the section in question:

• When the total amount withdrawn prematurely from an EPF account does not exceed ₹50,000
• When an employee changes their job, and the EPF amount gets transferred to a new account from the previous one
• If an employee decides to withdraw their EPF savings after continuous service of a minimum of 5 years
• When an employee provides their PAN card along with Form 15H or Form 15G
• If the employment contract of the employee is terminated due to completion of the project for which they were hired
• If the contract was terminated due to the employee’s illness
• If the business venture was discontinued

TDS Return and Due Dates

As mentioned already, entrusted deductors will have to deposit the amount deducted as tax under Section 192A of the I-T Act, 1961 in a dedicated Central Government account within a week of the following month. For TDS deducted on premature withdrawal of EPF in March, however, the deadline for depositing the tax is April 30.

TDS deductors have to file returns by submitting Form 26Q on a quarterly basis. The due date for each quarter is given below:

Final Word

Now that you have read this blog, hopefully you understand your TDS liabilities better under Section 192 of Income Tax Act, provided you need to make a premature EPF withdrawal. Consider the amount you wish to withdraw, the rate of tax that will be applicable in your specific case, and the exemptions available under the provisions of this section.

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