EPFO – If you are also a PF account holder then this news is for you. Actually, according to a recent report, let us tell you that PF account holders will now have to pay this much tax on withdrawing money.
Provident Fund i.e. PF is a great way for working people to save and raise huge funds. A part of the basic salary of working people is deposited in the PF fund every month.
The government pays interest on the deposited amount on annual basis. The government has fixed the interest rate at 8.15 percent for the current financial year. PF account holders can easily withdraw the money deposited in their account if needed. But do you know that tax also has to be paid on withdrawal of this money? Let us understand…
Advice for withdrawing money after retirement-
It is generally better to take PF Account as a retirement plan. Experts also advise that money should be withdrawn from Provident Fund only after retirement. This is because you get a huge lump sum amount, which helps you in any kind of financial problem.
However, sometimes situations become such that you have to withdraw money from your PF account to meet your needs. In some cases, tax also has to be paid on withdrawals made from PF.
Tax on withdrawal before 5 years-
According to EPFO rules, if it has been more than five years since your PF account was opened and you want to withdraw some amount from your deposit, then in such a case you do not have to pay any tax. Whereas if your account has not been opened for five years, then tax will be deducted on the amount withdrawn by you. However, this tax is deducted like TDS. EPFO has set rules for this deduction also. According to this, if the PAN card of the PF subscriber is linked to his account, then 10 percent TDS is deducted, whereas if it is not linked, 20 percent TDS is deducted.
Tax is not deducted in these cases-
In some cases, tax is not payable on withdrawal of PF money made even before five years. In fact, if an employee leaves the job before this stipulated period due to ill health and withdraws his PF money, then in such a case he will not have to pay tax. Apart from this, if a company is closed, its employees do not have to pay tax on withdrawing money from PF. Apart from this, if you have changed your job before completion of five years and are merging that PF account with the PF account of the new company, then this is also absolutely tax free.
Advance for buying a house or plot-
In its scheme, EPFO has made provision for house building advance from your PF account for purchasing a plot, construction or purchase of a house. The EPF member who has completed five years of his membership. There should be at least one thousand rupees in his account including interest. Under this advance he can withdraw money from his account. To purchase a plot, 24 months salary including DA or total amount deposited in EPF account including interest and actual value of the plot. Whichever is less than these can be found.
How much is the deduction?
12 percent is deducted from an employee’s salary for the EPF account. Of the deduction made by the employer in the employee’s salary, 8.33 percent goes to the EPS (Employee Pension Scheme), while 3.67 percent goes to the EPF. You can check the current balance of your PF account in easy ways sitting at home. Many options have been given for this.