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TDS ON PAYMENT FROM EMPLOYEES PROVIDENT FUND [SECTION 192A]

Overview of Section 192A : TDS on Payment From Employees Provident Fund

Who is responsible to deduct tax

The trustees of the Employees’ Provident Fund Scheme, 1952, framed u/s 5 of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 or any person authorised under the scheme to make payment of accumulated balance due to employees.

When tax shall be deducted

The tax shall be deducted at the time of making of payment of accumulated balance due to the employee.

Deduction on which amount

Tax is deducted on the accumulated balance due to an employee participating in a recognised provident fund includible in his total income owing to the not applicability of the provisions of rule 8 of Part A of the Fourth Schedule.

Rule 8 of Part A of the Fourth Schedule provides the accumulated balance due and becoming payable to an employee participating in a recognised provident fund shall be exempted:

  1. if he has rendered continuous service with his employer for a period of 5 years or more; or
  2. 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

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 recognised provident fund maintained by such other employer.

Rate of TDS

10%

Any person entitled to receive any amount on which tax is deductible shall furnish his Permanent Account Number (PAN) to the person responsible for deducting such tax, failing which tax shall be deducted at the maximum marginal rate.

TDS is not applicable when amount of such payment or aggregate amount of such payment to the payee is less than Rs. 50,000/-.

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