TDS @ 10% on pre-mature taxable withdrawal from Employees Provident Fund Scheme

A new provision has been inserted for deduction of tax at the rate of 10% on pre-mature taxable withdrawal from Employees Provident Fund Scheme, 1952 (“EPFS“). Such provision casts an obligation on the trustee of the EPFS to deduct tax at source. However, to reduce the compliance burden of employees having taxable income below the taxable limit, it is amended to provide a threshold limit of payment of INR 30,000 for such provision to apply.

In case of employees paying tax at higher slab rates of 10%, the shortfall in the actual tax liability vis-à-vis TDS will be required to be paid by the employee through advance tax/ self assessment tax.

It is also amended that in case of non-furnishing of PAN by employees to the trustee of the EPFS, tax would be deductible at the maximum marginal rate. W.e.f. 01.06.2015