Operational guidelines for taxing EPF issued

Those who don’t link their PAN to the savings account will be charged at 20%

April 07, 2022 02:43 am | Updated 08:08 pm IST - NEW DELHI

A year after the government introduced a new tax on income arising from annual Employees’ Provident Fund (EPF) contributions over ₹2.5 lakh, operational guidelines on implementing the levy were finally issued on Wednesday.

For those who don’t link their Permanent Account Number (PAN) to their retirement savings accounts, tax will be deducted on their annual income on contributions over ₹2.5 lakh at the rate of 20%, the EPF Organisation (EPFO) has said.

The EPFO will maintain a non-taxable account and a taxable account for all such members who contribute over ₹2.5 lakh and reduce the tax deduction at source (TDS) for those who link their EPF accounts with the PAN issued by the Income Tax department, to 10%.

However, if the calculated TDS amount is up to ₹5,000, no TDS will be deducted on the interest credited to those EPF accounts, the EPFO said in a circular.

For expat or non-resident employees who have active EPF accounts in India, tax will be deducted at the rate of 30% or as per provisions of any Double Taxation Avoidance Agreement (DTAA) entered into with India by their respective countries.

For availing any benefit as per such DTAAs, EPF members have been tasked with filing a declaration under section 90 of the Income Tax Act, 1961. “Wherever interest income exceeds ₹50 lakh in such cases, an additional cess of 4% on the TDS amount as well as surcharges will be levied,” the EPFO said in its advisory.

The tax on EPF incomes for contributions will kick in from this assessment year, and apply to contributions made through 2021-22.

Top News Today

Sign in to unlock member-only benefits!
  • Access 10 free stories every month
  • Save stories to read later
  • Access to comment on every story
  • Sign-up/manage your newsletter subscriptions with a single click
  • Get notified by email for early access to discounts & offers on our products
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.

We have migrated to a new commenting platform. If you are already a registered user of The Hindu and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.