- Date : 02/02/2023
- Read: 3 mins
Are you aware that the TDS rate on EPF withdrawal has been reduced from 30% to 20%? Read this article to know more.
The Union Budget 2023 has made a significant announcement concerning India's Employees' Provident Fund (EPF) withdrawals. The Finance Minister has announced a reduction in the Tax Deducted at Source (TDS) rate on EPF withdrawals from 30% to 20%. This reduction is expected to bring much-needed relief to employees and retirees who have invested their hard-earned money in EPF. The decrease in TDS is expected to increase the disposable income of the employees and retirees, thereby boosting their purchasing power. The new TDS rate on EPF withdrawals is set to effect from 1st April 2023. This article will explore the new TDS rate on EPF withdrawals and what it means for employees and retirees. This article discusses the following aspects:
- Who will benefit from this reduction in the TDS rate? Is it applicable to all?
- What are the current Income Tax provisions concerning EPF withdrawal?
- When will this amendment (relating to the reduction in the TDS rate) come into effect?
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Who will benefit from this reduction in the TDS rate? Is it applicable to all?
The recent Union Budget 2023 presented by the Indian Finance Minister, Nirmala Sitharaman, has announced a reduction in the Tax Deducted at Source (TDS) rate for Employees' Provident Fund (EPF) withdrawals. The TDS rate has been lowered from 30% to 20% for individuals whose PAN is not updated with the EPFO records. This reduction will relieve those affected by the previous TDS rate and is a positive development for the common person. During her Budget speech, the Finance Minister highlighted the importance of reducing the TDS rate in non-PAN cases to aid in the financial well-being of the nation's citizens.
The Budget document noted that several low-paid employees need PAN. As a result, TDS is being deducted at the maximum marginal rate, i.e., 30 percent, as per section 192A. This TDS rate reduction has been made with the primary aim of providing relief to these.
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What are the current Income Tax provisions concerning EPF withdrawal?
It is to be noted that as per the current provisions of the income tax laws, TDS is applicable on EPF withdrawal if the funds are redeemed within five years of opening the EPF account. In cases where the PAN of the individual is available with the EPFO, TDS will be deducted at a rate of 10% if the withdrawal amount exceeds INR 50,000. Without PAN, the TDS will be levied at 30%. To exempt the EPF withdrawal from TDS, individuals may submit Form 15G/Form 15H as appropriate. These forms require the PAN of the individual to exempt TDS on the withdrawal of the EPF amount.
When will this amendment (relating to the reduction in the TDS rate) come into effect?
This amendment will take effect from 1st April 2023.
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Conclusion
The Indian Union Budget 2023, presented by the Finance Minister, Nirmala Sitharaman, announces a reduction in the Tax Deducted at Source (TDS) rate for Employees' Provident Fund (EPF) withdrawals. The TDS rate has been lowered from 30% to 20% for individuals whose PAN is not updated with the EPFO records. The primary aim of this reduction is to provide relief to low-paid employees who do not have a PAN; thus, TDS is being deducted at the maximum marginal rate of 30%. This amendment relating to the reduction in the TDS rate will come into effect on 1st April 2023, providing relief and financial well-being to the citizens of India.
