EPFO: TDS deductions applicable in case of non-residents; know cess, surcharge levy

TDS on EPF Withdrawal for non-residents: Withdrawal of the Employees’ Provident Fund (EPF) will be subjected to TDS or Tax Deducted at Source if the accountholder with the Employees’ Provident Fund Organisation (EPFO) has rendered less than five years of service and the accumulated amount is more than Rs 50,000. TDS shall be applicable at the following rates:

On Submission of PAN: No TDS is deducted if the member submits forms 15G/15H. If Forms 15G/15H is not submitted, TDS at 10 per cent is deducted. Form 15G and 15H are declaration forms under section 197A of the Income Tax Act, 1961 and is used to declare that you income is below the maximum exemption limit and hence TDS must not be deducted on withdrawal.
On non-submission of PAN, the TDS is deducted at Maximum Marginal Rate of 34.606 per cent.
No TDS is deducted on transfer of funds, payment of advance, or if the service is terminated by the employer beyond control of employee.

For Non-residents:

If the EPF account is linked with valid PAN, rate of TDS will be 30 per cent or tax rate specified under the DTAA (Double Taxation Avoidance Agreement) whichever is beneficial to PF member.

In case, there is a TDS deduction, there will be applicable cess and surcharge for non-residents.

The cess is charged at 4 per cent of the TDS amount.

Rate of surcharge is as under:

1) For interest up to Rs 50 lakhs, the surcharge is Nil.

2) For interest above Rs 50 lakhs and up to Rs 1 cr – 10 per cent.

3) For interest above Rs 1 cr and up to Rs 2 cr – 15 per cent.

4) For interest above Rs 2 cr and up to Rs 5 cr – 25 per cent.

5) For interest above Rs 5 cr and up to Rs 10 cr – 37 per cent.

6) For interest exceeding Rs 10 cr – 37 per cent.

EPFO is one of the World's largest Social Security Organisations in terms of clientele and the volume of financial transactions undertaken according to claims made by the website. At present it maintains 24.77 crore accounts (Annual Report 2019-20) pertaining to its members.