How NRIs can switch steadiness quantity from provident fund
What are the restrictions on transferring the steadiness collected in an Employee Provident Fund (EPF) to an non-resident extraordinary (NRO) account? My try to deposit my PF quantity into my non-resident exterior (NRE) account was rejected by the financial institution. Also, one of many financial institution workers stated it can’t be deposited in my NRO account both. What are the federal government tips concerning such switch?
—Sreenivasa Rao Kagolanu
Under the earnings tax regulation, the collected steadiness due and changing into payable to an worker taking part in a acknowledged provident fund is excluded from computation of whole earnings underneath the next circumstances:
a. If the worker has rendered steady providers with this employer for a interval of 5 years or extra; or
b. If the service has been terminated by motive of the worker’s ill-health, or by the contraction or discontinuance of the employer’s enterprise or different trigger past the management of the worker;
c. If, on the cessation of his employment, the worker obtains employment with some other employer, to the extent the collected steadiness due and changing into payable to him is transferred to his particular person account in any acknowledged provident fund maintained by such different employer; or
d. If the complete steadiness standing to the credit score of the worker is transferred to his NPS (National Pension Scheme) account
Assuming you might have rendered steady service of 5 years or extra, the withdrawal of collected provident fund steadiness will not be chargeable for tax as per the above and accordingly, there must be no requirement for TDS. However, any curiosity earned publish cessation of employment until date of withdrawal can be liable to tax.
Under the alternate management regulation, a person qualifying as non-resident Indian (NRI) might open a NRE account or NRO account. As per Schedule 3 of the Foreign Exchange Management (Deposit) Regulations, 2016, the NRO account might be credited for the next quantities:
a. Proceeds of remittances acquired in any permitted foreign money from exterior India by way of banking channels or any permitted foreign money tendered by the account holder throughout his short-term go to to India or transfers from rupee accounts of non-resident banks.
b. Legitimate dues in India of the account holder.
c. Transfers from different NRO accounts.
d. Any quantity acquired by the account holder in accordance with alternate management regulation.
The provident fund withdrawal proceeds could also be construed as legit dues and accordingly, credit score of provident fund withdrawal proceeds could also be a permissible credit score to the NRO Account. Accordingly, you might request the provident fund Authorities to switch the withdrawal proceeds to your NRO checking account.
Sonu Iyer is tax associate and folks advisory providers chief, EY India.
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Updated: 14 Jun 2023, 11:07 PM IST
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