Do NRIs need to pay tax on PF withdrawal?
I’m an NRI and need to withdraw my Employees’ Provident Fund (EPF) stability from India. I had accomplished 5 years of service with my earlier employer. Would there be any further tax deduction at supply (TDS) as funds can be transferred to an NRO account?
—Name withheld on request
An worker (Indian nationwide) is eligible to withdraw PF beneath any of the next circumstances:
(a) On retirement from service after attaining the age of 55 years; (b) On retirement on account of everlasting and whole incapacitation; (c) On migration from India for everlasting settlement overseas; (d) On being unemployed in India for greater than 2 months
An worker is eligible to withdraw from Pension Scheme (EPS) if he has not rendered service of 10 years or extra on the date of cessation of employment as lump sum quantity. The worker might be entitled for withdrawal profit or might go for scheme certificates. If an worker has rendered service of 10 years or extra, the worker might be eligible for month-to-month pension from EPS.
Thus, in your case, you’re eligible to withdraw lump sum quantity from EPS in case your whole contributory service in India is lower than 10 years.
As you have got steady service of 5 years or extra in India, the withdrawal of collected stability updated of cessation is not going to be taxable in India.
Any curiosity on employer’s contributions and worker’s contributions after the date of cessation of employment till the date of withdrawal is taxable in India.
As per the rules, if a person withdraws provident fund after 5 years, there shouldn’t be any TDS on the time of withdrawal. But the EPFO might deduct tax on the curiosity earned after the date of cessation of employment.
I’m an NRI and have non-resident abnormal (NRO) and non-resident exterior (NRE) financial institution accounts in India. I need to understand how I can switch my NRO stability to my NRE account in identical financial institution.
—Name withheld on request
Under the change management regulation, it’s possible you’ll switch stability out of your NRO account to your NRE account as much as $1 million per monetary 12 months topic to documentation requested by the financial institution. The financial institution might request for documentary proof to substantiate that Income-tax has been paid in India on the quantity to be remitted.
Sonu Iyer is tax companion and other people advisory companies chief, EY India. Queries at [email protected]
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