Section 192A of the Income Tax Act Explained

section 192A of income tax act — (Source: taxconcept.net)

Section 192A of the Income Tax Act focuses on Tax Deducted at Source on a withdrawal amount from Employees' Provident Fund account.

This Section allows trustees of the EPF to deduct tax at source while making payment when employees fail to meet conditions specified under Rule, Part A of the Fourth Schedule.

Individuals can find specific guidelines for TDS to deduct from the withdrawal amount and additional vital information in the upcoming segment.

When Is TDS Deduction Applicable Under Section 192A?

Entities recognised under the Employees' Provident Fund Scheme who qualifies to pay employees the accumulated fund can deduct TDS in the following situations:

TDS will be deducted when a provident fund account has a balance of above ₹ 30,000 during the time of withdrawal. Additionally, an individual has worked less than 5 years in a company.
When an employee transfers his or her accumulated provident funds from old to a new PF account. This situation happens when he or she changes a company.
Section 192A of the Income Tax Act is applicable when an employer terminates an employee due to the latter's physical illness. Other reasons include discontinuation of a business venture or a project in which that employee was working, etc.
When an employee withdraws funds accumulated in the PF account after delivering consistent service for 5 years.
This Section 192A of the Income Tax Act applies when an individual withdraws below ₹ 30,000. Additionally, he has working experience of less than 5 years in a corporation.
The threshold limit for a deduction of TDS applies when the total withdrawal amount is above ₹ 50,000

What Is the TDS Rate on Provident Fund Withdrawal Under Section 192A?

A deductor deducts 10% of TDS on the amount withdrawn from provident fund accounts. For that, account holders must submit their PAN cards.

If they provide Form 15H or 15G, deductors will not deduct TDS under Section 192A of the Income Tax Act. However, they will deduct TDS at the maximum marginal rate if an individual fails to furnish his or her PAN card, Form 15H or 15G.

When Is TDS Deduction not Applicable Under Section 192A?

Take a look at the following circumstances during which deductors do not deduct tax at source under Section 192A of the Income Tax Act:

The withdrawal amount from an EPF account is below ₹ 50,000.
An individual withdraws an amount from EPF after rendering 5 years of consistent service.
An individual furnishes Form 15H or Form 15G, along with his or her PAN card.

Thus, individuals must carefully go through these pointers about Section 192A of the Income Tax Act. Knowing about this Section will allow them to understand the withdrawal process and reduce TDS deduction. This will lower their tax burden and maximise their savings.

Frequently Asked Questions

✓ Is providing a PAN card mandatory under Section 192A of the Income Tax Act?

It is not compulsory to provide a PAN card when an individual has worked in an organisation for more than 5 years. He or she also doesn't need to submit Form 15G or 15H.

✓ When did this Section 192A of the Income Tax Act come into effect?

Section 192A of the Income Tax Act came into effect on 1st June 2015.

Switch to Digit Insurance

Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.