EPFO clarifies on TDS for payment of Provident Fund

EPFO has recently issued a clarification on 20 May 2019, that Tax need not be deducted at source on payment of accumulated balance which are due and have become payable to the employee participating in recognised provident fund as per Rule 8 of Part – A Fourth schedule of the Income-tax Act, 1961 under the following circumstances:

(i) if the employee has rendered continuous service with the employer for a period of five years or more, or

(ii) if, though he has not rendered such continuous service, the service has been terminated by reason of the employee’s ill-health, or by the contraction or discontinuance of the employer’s business or other cause beyond the control of the employee; or

 (iii) if, on the cessation of his employment, the employee obtains employment with any other employer, to the extent the accumulated balance due and becoming payable to him is transferred to his individual account in any recognized provident fund maintained by such other employer.

Under the above situations, the accumulated balance due and payable to an employee is not liable for TDS under section 192A of the Income Tax Act, 1961.

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