Section 192A- TDS on Payment of Accumulated PF Balance Due to an Employee

  1. Deductor: TDS to be deducted at the time of payment by trustees of Employees’ Provident Fund Scheme, 1952 or any other person authorized under the scheme to make payment of accumulated sum to employees.
  2. Applicability: TDS shall be deducted in the following situations-

a. The amount from EPF has been withdrawn before completion of continuous 5 years of service, and

b. The amount withdrawn is more than Rs 50,000.

3. TDS Rate: TDS at a flat rate of 10%. PAN needs to be compulsorily quoted by the deductee; otherwise tax shall be deducted at maximum marginal rate(~36%).

4. Components on which TDS shall be deducted:

Component of lump sum payment Is this component taxable in the hands of employee not completing continuous 5 years of service? Is it subject to TDS if other conditions of section 192A are satisfied?
Employer’s Contribution Taxable under head “Salary” Subject to TDS
Interest on Employer’s Contribution Taxable under head “Salary” Subject to TDS
Employee’s Contribution Not Taxable No TDS required
Interest on Employee’s Contribution Taxable under head “Other Sources” Subject to TDS

 

  1. Exceptions:

a. The aggregate amount of EPF withdrawal is less than Rs 50,000.

b. The withdrawal has been done after continuous service of 5 years.

c. In case of a job change, the PF amount is transferred from one account PF account to another.

d. If there is a termination of employment due to employee’s ill health, completion of the project for which employee was employer, discontinuation of the employer’s business or any other reason which is beyond the control of the employee.

e. If the employee has submitted Form 15G/ Form 15H along with the PAN under section 197A.

f. If post retirement, any interest is paid on the accumulated balance not withdrawn, tax is required to be deducted as per section 194A, since there is no employer –employee relationship

 

  1. Section Codes to be entered in case of filing TDS return under Form 24Q:

a. 92A: Payments made to Govt. employees other than Union Govt. employees

b. 92B: Payments made to employees other than Govt. employees

c. 92C: Payments made to Union Govt. employees.

The TDS rates shall be the same in all the three cases above. It’s just the matter of classification of employees as per their relevant authority.

˜Authored by – CA Anushka Saraogi˜

Section 194B: TDS on Winnings from Horse Races

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