EPFO: TDS deductions applicable in case of non-residents; know cess, surcharge levy

TDS on EPF withdrawal for non-residents: Withdrawal from Employees Provident Fund (EPF) will be subject to TDS or taxes deducted at source if the account holder with the Employees Provident Fund Organization (EPFO) has rendered less than five years of service and the amount accumulated is more than 50,000 rupees. . TDS will be applicable on the following rates:

When submitting the PAN: No TDS is deducted if the member submits Forms 15G/15H. If Forms 15G/15H are not submitted, TDS is deducted at 10%. Forms 15G and 15H are declaration forms under section 197A of the Income Tax Act, 1961 and are used to declare that your income is below the maximum exemption limit and therefore not TDS has to be deducted on withdrawal.
On failure to file PAN, TDS is deducted at the maximum marginal rate of 34.606 percent.
No TDS is deducted on transfer of funds, advance payment or if the employer cancels the service beyond the employee’s control.

For non-residents:

If the EPF account is linked with a valid PAN, the rate of TDS will be 30 percent or the tax rate specified in the DTAA (double taxation avoidance agreement), whichever is beneficial to the PF member.

In case of TDS deduction, there will be cession and surcharge applicable for non-residents.

Cessation is levied at 4 percent of the TDS amount.

The surcharge rate is as follows:

1) For interest up to 50 lakhs, surcharge is nil.

2) For interest above Rs 50 lakhs and up to Rs 1 cr – 10 percent.

3) For interest above Rs 1 cr and up to Rs 2 cr – 15 percent.

4) For interest above Rs 2 cr and up to Rs 5 cr – 25 percent.

5) For interest above Rs 5 cr and up to Rs 10 cr – 37 percent.

6) For interest above Rs 10 cr – 37 percent.

EPFO is one of the largest Social Security Organizations in the world in terms of clientele and volume of financial transactions carried out as per the claims made by the website. It currently maintains 24.77 million accounts (Annual Report 2019-20) of its members.



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