The Finance Minister, Nirmala Sitharaman, proposed lowering the TDS (tax deducted at source) rate for EPF withdrawals from accounts that have not been seeded with a PAN in the Union Budget.
According to Budget 2023, if the user’s PAN card is not seeded with the EPF account, withdrawals from the account before the end of five years will be subject to a 20% tax rate instead of the current 30% rate.
In non-PAN cases, the TDS rate on the withdrawal of taxable component from the Employees’ Provident Fund Scheme is currently 30%. As in other non-PAN cases, it is proposed to reduce it to 20%,” FM Sitharaman stated during the Budget presentation.
Taxes now apply to early withdrawals from an EPF account. If the withdrawal was less than Rs 50,000, the funds would not be subject to TDS. On withdrawals exceeding Rs 50,000, you will be required to pay tax at the maximum rate of 30% if your PAN is not linked to your EPF account.
The amount withdrawn from an individual’s EPF account during the first five years after opening the account will be included in their taxable income.
If you haven’t already, you should wait until April 1 to withdraw money from your EPF account because, after that date, if your PAN is connected to your EPF account, the tax rate will be 20% instead of 30%.
In the budget, Sitharaman suggested that non-government paid workers’ retirement leave be tax-free up to Rs 25 lakh, up from Rs 3 lakh.
