Circumstances & Applicability of TDS on PF Fund according to New ruling Under IT Act
FREQUENTLY ASKED QUESTIONS (FAQs)
Q 1. Under which circumstances TDS will be applicable in accordance with the Ministry of Finance Notification G.S.R. 604(E) dated 31.08.2021?
Ans. TDS will be applicable in case of PF Final Settlement, transfer claims, on transfer from Exempted establishments to EPFO and vice versa, on transfer from one Trust on another, past accumulations transfer, at the time of annual accounts processing, on back period accounting after accounts for year 2021-22 are processed in accordance with the Ministry of Finance Notification G.S.R. 604(E) dated 31.08.2021
Q 2. What is the effective date of deduction of TDS in accordance with the Ministry of Finance Notification G.S.R. 604(E) dated 31.08.2021?
Ans. it will be effective from 1st day of April, 2022.
Q 3. Is there any minimum amount upto which tax is not deducted?
Ans. The threshold limit for contributions for previous year 2021-22 and subsequent previous year is 2,50,000/- for EPF members.
Q 4. Whether the TDS will be applicable in death cases.
Ans. Yes, TDS will be applicable in death cases as in the case of a live member.
Q 5. Whether TDS will be applicable to Exempted Establishments and Exempted Trusts.
Ans. Yes, TDS will be applicable to Exempted Establishments and Exempted Trusts.
Q 6. Whether TDS will be applicable in case of International Workers.
Ans. Yes, TDS will be applicable in case of International Workers as in the case of Indian workers.
Q 7. At what rate TDS will be deducted if PF account is linked with a valid PAN for resident member?
Ans. If PF account is linked with a valid PAN, rate of TDS shall be 10 percent. (Ref. section 194 A)
Q 8. Whether TDS will be deducted if TDS amount is up to Rs 5000/- if member being resident.
Ans. No, TDS will not be deducted if TDS amount is up to Rs 5000/- if member is a resident. However, the member’s individual tax Liability towards his total tax shall remain.
Q 9. Whether TDS will be deducted if TDS amount is up to Rs 5000/- if member being non resident.
Ans. TDS will be deducted at the applicable rates.
Q 10. Is it mandatory for EPF member to disclose his PAN details with EPFO / link PAN with UAN ?
Ans. As per section 206AA of IT Act, every taxpayer who receives taxable income needs to furnish their PAN to the payer (EPFO) of such income.
Q 11. At what rate TDS will be deducted in case of resident member if PAN is not linked/ invalid PAN?
Ans. If the PF Account is not linked with a valid PAN, tax shall be deducted at the higher of the following rates
(i) at the rate specified in the relevant provision of 206AA of the IT Act; or (ii) at the rate or rates in force; or
(iii) at the rate of twenty per cent: (Ref. section 194 A read with section 206 AA of Income Tax Act)
Q 12. At what rate TDS will be deducted if PF account is linked with a valid PAN for non-resident member ?
Ans. If PF account is linked with a valid PAN, rate of TDS shall be 30 percent or tax rate as specified in the DTAA (Double Taxation Avoidance Agreement) whichever is beneficial to PF member. (Ref. section 195 of IT Act read with section 90 of IT Act)
Q 13. At what rate TDS will be deducted in case of non-resident member if PAN is not linked/ invalid PAN?
Ans. If PF account is not linked with a valid PAN, rate of TDS shall be 30 percent or tax rate as specified in the DTAA (Double Taxation Avoidance Agreement) whichever is beneficial to PF member. (Ref. section 195 of IT Act read with section 90 of IT Act)
Q 14. Whether surcharge and cess will also be applicable in case of TDS deduction in case of member being non-resident?
Ans. Yes, cess @ 4 % of TDS.
Rate of Surcharge is as under:
- For interest upto Rs. 50 lacs- Nil
- For interest above Rs. 50 lacs and upto 1 crore – 10 %
- For interest above Rs. 1 crore and upto 2 crore – 15%
- For interest above Rs. 2 crore and upto 5 crore – 25%
- For interest above Rs. 5 crore and upto 10 crore – 37%
- For interest exceeding Rs. 10 crore – 37%
- (For FY 2021-22 / AY 2022-23)
Q 15. Whether surcharge and cess will also be applicable in case of TDS under section 194 A?
Ans. No. (For FY 2021-22 / AY 2022-23)
Q 16. In case of death of a member, whose (EPF member or nominee) PAN will be considered for deduction of TDS?
Ans. Deduction of tax will be same as in case of a live EPF Member.
Q 17. Is there any declaration / form to be submitted by EPF member for claiming benefits of tax rates as per DTAA?
Ans. Yes, as per section 90 of IT Act member has to submit form 10 F and form 10 FB of Income Tax. [Ref. Sub-rule (1) of rule 21 AB and rule 21 AB (4)]
Q 18. By which date TDS deducted is to be deposited?
Ans. For the month of March —– by 30th April of next financial year. For other months —— by 7th of next month.
Q 19. How to deposit TDS?
Ans. Tax Deducted at Source has to be deposited using Challan ITNS-281.
Q 20. What is the rate of interest for not deduction of TDS?
Ans. As per Section 201 of IT Act, Interest will be levied @ 1 % for every month or part of a month on the amount of such tax from the date such tax was deductible.
Q 21. What is the rate of interest for not depositing of TDS deducted?
Ans. Interest @ 1.5 % for every month or a part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid to the credit of the Government.
Q 22. What is date for filing fee of TDS statement / return?
Ans. Due date for furnishing the TDS return in form 26Q for TDS u/s 194A and in 27Q if TDS is deducted u/s 195.
Quarter – Due Date of filing TDS return
April to June – 31st July
July to September – 31st October
Oct to December – 31st January
January to March – 31st May
Q.23. what is penalty for not filing of TDS return?
Rs.200 for every day during which the failure continues. The amount of late fees however shall not exceed the amount of TDS. (ref section 200(3) read with section 234 E)
Q 24. Is there any return to be filed by tax deductor with Income Tax department?
Ans. Yes,
- Form 26Q – Statement of deduction of tax under section 194.
- Form 27Q – Statement of deduction of tax under section 195 in respect of the deducted (PF member) who is a non-resident (not being a company) or a foreign company or resident but not ordinarily resident.
Q 25. What are due dates for filing form 26 Q, 27 Q of Income Tax.
Ans. Due date for filing of TDS return (Both for Government and other Deductor) is as under:
- For 1st quarter i.e from April to June ——- 31st July of the financial year
- For 2nd quarter i.e from July to September ——- 31st October of the financial year
- For 3rd quarter i.e from October to December ——- 31st January of the financial year
- For 4th quarter i.e from January to March——- 31st May of the financial year immediately following the financial year in which deduction is made
Q 26..In case of Inter Office Transfer from One Regional Office to another, how TDS will be calculated?
Ans. In case of Inter Office Transfer from One Regional Office to another, details of month wise contributions during the financial year 2021-22 have to be shared through revised Annexure-K. The detail of total Taxable contribution along with its interest and TDS deducted (if any) is also to be shared through Annexure –K. Further, Opening Balance and Closing Balance along with withdrawals (separately for Taxable and NonTaxable part will also have to be shared).
Q 27. In case of Exempted Trust to EPFO, how TDS will be calculated?
Ans. In case of Exempted Trust to EPFO, Exempted Trusts have to intimate to EPFO the month wise amount of Employee share of contribution of the member and TDS (if any) deducted and details of month wise contribution for the previous year 2021-22 and all subsequent previous years have to be shared through Annexure-K or other mode. The detail of total taxable contribution along with its interest and TDS deducted (if any) is also to be shared through Annexure –K. Further, Opening Balance and Closing Balance along with withdrawals (separately for Taxable and Non-Taxable part will also have to be shared).
On the basis of information provided by the Exempted Trust, EPFO will arrive at the total employee share during the previous year 2021-22 and subsequent previous year and interest thereof against the member/UAN and TDS amount after subtracting of TDS already deducted/ deposited (if any) against such member, EPFO while processing annual accounts/ claim settlement/ transfer of PF account of such members shall deposit the balance amount of TDS at the applicable rate.
Q 28. In case of Transfer from EPFO to Exempted Trust, how TDS will be calculated?
Ans. In case of Transfer from EPFO to Exempted Trust, EPFO has to intimate to an Exempted Trust about the month wise amount of Employee share of contribution of the member and TDS (if any) deducted. Details of month wise contribution for the previous year 2021-22 and all subsequent previous years have to be shared through Annexure-K or other mode. The detail of total Taxable contribution along with its interest and TDS deducted (if any) is also to be shared through Annexure –K. Further, Opening Balance and Closing Balance along with withdrawals (separately from Taxable and Non-Taxable part) will also be shared. On the basis of information provided by the EPFO, the Trust will arrive at the total employee share and interest thereof against the member/UAN and TDS amount after subtracting TDS already deducted/ deposited against such member. Exempted Trusts while processing the annual accounts/ settlement/ transfer of PF account of such members will have to deposit the balance TDS on interest in taxable account.
Q 29. What are the details to be shared in Annexure-K while transferring the fund from previous account to current account?
Ans. The month wise amount of Employee share of contribution of the member and TDS (if any) deducted and details of month wise contribution for the previous year 2021-22 and all subsequent previous years have to be shared through Annexure-K or other mode. The detail of total taxable contribution along with its interest and TDS deducted (if any) is also to be shared through Annexure –K. Further, Opening Balance and Closing Balance along with withdrawals (separately for Taxable and Non-Taxable part will also have to be shared).
Q 30. Whether taxable contribution part will be subject to a separate accounting of interest?
Ans. Yes, taxable contribution part will be subject to a separate accounting of interest and maintenance as the closing balance of this part will earn interest next year and will be subject to TDS.
Q 31. Whether taxable and non-taxable both parts will be used for withdrawal?
Ans. Yes, Withdrawal will be from taxable account thereafter from non-taxable account.
Q.32. what is the timeline for submission of form -16 A.
Ans. Due Dates to issue TDS certificates (Form 16)
Form No. – Due date Periodicity
Form 16 (TDS on salary) – 31st May 2022 Annual
Form 16A (TDS on income other than salary) – Within 15 days from due date of furnishing TDS return Quarterly
Note:
- Form 16A is issued within 15 days from the due date of furnishing the TDS / TCS return.
- Form 16A is for TDS deducted on income other than salary
- Tags EPF Scheme
Criticality in Compliance Planning & Practice
- Post author By Vijay S
- Post date August 26, 2021
- No Comments on Criticality in Compliance Planning & Practice
Corporate best Practices: Compliance Plans
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