I labored in a corporation for 3 years however was transferred to a brand new unit after the corporate cut up and I labored right here for 4 years and 6 months. While the Employee Provident Fund (EPF) account reveals no break for this complete interval, the UAN website reveals the service report of two organizations individually. I’m going through a difficulty now whereas submitting a declare on-line because the tenure is proven as lower than 5 years and so there’s tax deduction at supply (TDS). How can I resolve this?
—Sudha
As per the provisions of the Income-tax Act, 1961, gathered steadiness due and changing into payable to an worker collaborating in a recognised provident fund shall be excluded from the computation of his whole revenue
(i) if he has rendered steady service together with his employer for a interval of 5 years or extra, or
(ii) if the service has been terminated by purpose of worker’s ill-health, or by contraction or discontinuance of the employer’s enterprise or different trigger past the management of the worker, or
(iii) if, on the cessation of employment, the worker obtains employment with every other employer, to the extent the gathered steadiness due and changing into payable is transferred to his particular person account in any acknowledged provident fund maintained by new employer; or
(iv) if the whole steadiness standing to the credit score of the worker is transferred to his NPS account
As seen above, if on the cessation of employment, the gathered steadiness due and changing into payable is transferred to PF account with new employer and the interval of whole service is 5 years or extra, the withdrawal shall not be taxable. Accordingly in such case, there shall not be any TDS.
It is to be famous that the web UAN portal displays service interval below the respective employers individually. If the PF accumulations from the primary employer is transferred to the PF account with the brand new employer, then the PF division robotically takes into consideration the cumulative service interval and permits the exemption obtainable and therefore no TDS is utilized.
Based on the restricted info obtainable, it appears you haven’t transferred the PF accumulations from the primary employer and thus the PF division is contemplating the service interval as lower than 5 years and accordingly contemplating the identical as taxable and deducting tax at supply / TDS.
You might due to this fact prepare for switch of the PF accumulations from the primary employer to the PF account with the brand new employer (by following the required course of below the PF Scheme relying upon whether or not the earlier entity was with RPFC or had an inhouse Trust), which might allow the EPFO to permit you the above acknowledged exemption or else you have to declare the tax refund whereas submitting the tax return. In case of claiming of tax refund within the return, the tax authorities might search clarification for a similar contemplating that TDS had been deducted by the EPFO on such incomes.
Parizad Sirwalla is associate and head, international mobility providers, tax, KPMG in India.
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