In some relief to subscribers of the retirement fund body EPFO, the government has announced that no tax would be deducted at source for provident fund (PF) withdrawals of up to Rs 50,000 from June 1.
The government raised the threshold limit of PF withdrawals for deduction of tax (TDS) from the existing Rs 30,000 to Rs 50,000, a senior official told PTI.
The Finance Act, 2016 has amended section 192A of Income Tax Act, 1961 to raise the threshold limit of PF withdrawal from Rs 30,000 to Rs 50,000 for Tax Deducted at Source (TDS).Govt Notification
The provision will come into effect from 1 June 2016.
The government had introduced the proposal to deduct TDS on PF withdrawals in order to discourage premature withdrawal and to promote long term savings.
According to existing provisions, TDS is deducted at the rate of 10 percent provided PAN is submitted.