EPF withdrawal amount: Taxation

• If a salaried employee opts for withdrawal after continuous service of five years or above, there will be no TDS deduction on the amount.
• It is important to note that if withdrawal is made before the completion of five years of continuous service, the amount withdrawn will be taxable.
• According to new EPF rules announced by the finance minister in budget for financial year 2015-16, EPF withdrawal (taxable) will attract TDS deduction at the rate of 10% (in cases of registered PAN) or up to a maximum of 30% (in cases of unregistered PAN). However, no TDS will be deducted if the withdrawal amount is under Rs.30,000.
• It is important to note that an individual can submit form 15G during the time of withdrawal if his or her income is less than the basic exemption limit even after the addition of the provident fund withdrawal amount. If a subscriber does not submit his or her PAN, TDS will be deducted at 34% on his or her withdrawn amount. If salaried persons want to avoid TDS, they can submit form no. 15H (senior citizens) or 15G for amount up to Rs.3 lakh and Rs.2.5 lakh respectively (both the said forms are declaration forms which can be used by employees whose income is less than the taxable amount).
• It is important to note that there will be no TDS deduction in cases of transfer of a provident fund account and termination of an employment contract as a result of failing health (employee), cessation/discontinuation of a business venture (employer) or any other cause which may not be in the domain of an employee.

​

Poonam Jain

Chartered Accountant

​Email: poonam.ca.jain@gmail.com

TDS RATE CHART FY 2016-17 AY 2017-18

TDS RATE CHART FY 2016-17 AY 2017-18 (%)
Sec	Nature of Payment	Cut off (Rs.)	Indi/HUF	Others
192	Salaries	-	Avg rates	NA
192A	Premature withdrawal from EPF	30000 (50000)	10	NA
193	Interest on securities	10000	10
194	Dividends	2500	10
194A	Interest Banks/Other	10000/5000	10
194B	Winning from Lotteries	10000	30
194BB	Winnings from Horse Race	5000 (10000)	30
194C	Contractor-Single/Yearly	30K/75K(1Lakh)	1	2
	Transporter(44AE) Declaration with PAN	As above	-	-
194D	Insurance Commission	20000 (15000)	10(5 %)
194DA	Life insurance policy	100000	2 (1%)
194EE	NSS	2500	20 (10%)	NA
194G	Commission /Lottery	1000(15000)	10(5%)
194H	Commission / Brokerage	5000 (15000)	10(5%)
194I	Rent Land  and  Building F&F	180000	10
194I	Rent-Plant/Machinery/equipment	180000	2
194IA	Immovable property	50 Lakh	1
194J	Professional Fees	30000	10
194LA	Immovable Property	2 Lakh (2.5 Lakh)	10

Entries in Red color are applicable wef 01.06.2016

Depreciation – Section 32

• There are two conditions for claiming depreciation 
• There should be asset in the block 
• There should be a value(wdv) in the block 
• No depreciation can be claimed on the sale of depreciable asset irrespective of the date of Sale
• Section 50 for computation of capital gains in case of depreciable assets Notwithstanding anything contained in clause (42A) of section 2, where the capital asset is an asset forming part of a block of assets in respect of which depreciation has been allowed under this Act or under the Indian Income-tax Act, 1922 (11 of1922), the provisions of section 48 and section 49 shall be subject to the following modifications :- 
•  where the full value of the consideration received or accruing as a result of the transfer of the asset together with the full value of such consideration received or accruing as a result of the transfer of any other capital asset falling within the block of the assets during the previous year, exceeds the aggregate of the following amounts, namely:-
•  a. Expenditure incurred wholly and exclusively in connection with such transfer or transfers; 
• b. The written down value of the block of assets at the beginning of the previous year; and 
• c. The actual cost of any asset falling within the block of assets acquired during the previous year, such excess shall be deemed to be the capital gains arising from the transfer of short-term capital assets;
• Where any block of assets ceases to exist as such, for the reason that all the assets in that block are transferred during the previous year, the cost of acquisition of the block of assets shall be the written down value of the block of assets at the beginning of the previous year, as increased by the actual cost of any asset falling within that block of assets, acquired by the assessee during the previous year and the income received or accruing as a result of such transfer or transfers shall be deemed to be the capital gains arising from the transfer of short-term capital assets.