TDS in case of Inoperative PAN under Section 192A
This query is : Resolved
20 February 2025
What will be the rate of TDS under section 192A in case of a person not completed 5 years of Job, withdrawal is more than 50,000 and has his PAN inoperative at the time of TDS?
20 February 2025
At the rate of twenty per cent OR at highest applicable slab rate ::: Whichever higher.
20 February 2025
Hi, please check the next message
20 February 2025
As per section 192A on income tax act before Finance Act, 2023, section to be read as :-
Payment of accumulated balance due to an employee.59
192A. Notwithstanding anything contained in this Act, the trustees of the Employees' Provident Fund Scheme, 1952, framed under section 5 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) or any person authorised under the scheme to make payment of accumulated balance due to employees, shall, in a case where the accumulated balance due to an employee participating in a recognised provident fund is includible in his total income owing to the provisions of rule 8 of Part A of the Fourth Schedule not being applicable, at the time of payment of the accumulated balance due to the employee, deduct income-tax thereon at the rate of ten per cent :
Provided that no deduction under this section shall be made where the amount of such payment or, as the case may be, the aggregate amount of such payment to the payee is less than fifty thousand rupees:
Provided further that any person entitled to receive any amount on which tax is deductible under this section shall furnish his Permanent Account Number to the person responsible for deducting such tax, failing which tax shall be deducted at the maximum marginal rate.
But after Finance Act, 2023 Section 192A to be read as:-
Payment of accumulated balance due to an employee.
192A. Notwithstanding anything contained in this Act, the trustees of the Employees' Provident Funds Scheme, 1952, framed under section 5 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) or any person authorised under the scheme to make payment of accumulated balance due to employees, shall, in a case where the accumulated balance due to an employee participating in a recognised provident fund is includible in his total income owing to the provisions of rule 8 of Part A of the Fourth Schedule not being applicable, at the time of payment of the accumulated balance due to the employee, deduct income-tax thereon at the rate of ten per cent :
Provided that no deduction under this section shall be made where the amount of such payment or, as the case may be, the aggregate amount of such payment to the payee is less than fifty thousand rupees.
83[***]
83. Second proviso omtt. by the Act No. 8 of 2023, w.e.f. 1-4-2023.
Still every website shows that in case of Inoperative PAN, MMR will be applicable that is the tax rate will be 34.32% but the same proviso has been removed so isn't it should be 20% instead of MMR? Am I getting something wrong?
Payment of accumulated balance due to an employee.59
192A. Notwithstanding anything contained in this Act, the trustees of the Employees' Provident Fund Scheme, 1952, framed under section 5 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) or any person authorised under the scheme to make payment of accumulated balance due to employees, shall, in a case where the accumulated balance due to an employee participating in a recognised provident fund is includible in his total income owing to the provisions of rule 8 of Part A of the Fourth Schedule not being applicable, at the time of payment of the accumulated balance due to the employee, deduct income-tax thereon at the rate of ten per cent :
Provided that no deduction under this section shall be made where the amount of such payment or, as the case may be, the aggregate amount of such payment to the payee is less than fifty thousand rupees:
Provided further that any person entitled to receive any amount on which tax is deductible under this section shall furnish his Permanent Account Number to the person responsible for deducting such tax, failing which tax shall be deducted at the maximum marginal rate.
But after Finance Act, 2023 Section 192A to be read as:-
Payment of accumulated balance due to an employee.
192A. Notwithstanding anything contained in this Act, the trustees of the Employees' Provident Funds Scheme, 1952, framed under section 5 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) or any person authorised under the scheme to make payment of accumulated balance due to employees, shall, in a case where the accumulated balance due to an employee participating in a recognised provident fund is includible in his total income owing to the provisions of rule 8 of Part A of the Fourth Schedule not being applicable, at the time of payment of the accumulated balance due to the employee, deduct income-tax thereon at the rate of ten per cent :
Provided that no deduction under this section shall be made where the amount of such payment or, as the case may be, the aggregate amount of such payment to the payee is less than fifty thousand rupees.
83[***]
83. Second proviso omtt. by the Act No. 8 of 2023, w.e.f. 1-4-2023.
Still every website shows that in case of Inoperative PAN, MMR will be applicable that is the tax rate will be 34.32% but the same proviso has been removed so isn't it should be 20% instead of MMR? Am I getting something wrong?
20 February 2025
Technically you are right, but no clarification has been given by CBDT, so it is up to EPF management to decide at what rate they deduct TDS.
20 February 2025
I saw some TDS return under section 192A even after deducting 20% in case of inoperative PAN but it still got an intimation of demand from TRACES for short deduction and in Justification report they show the Deduction Rate at 30%.
Do they have to pay the Demand or we can argue to the department for the same to rectify this?
Do they have to pay the Demand or we can argue to the department for the same to rectify this?
20 February 2025
Considering MMR rate, argument may not work. Better to pay demand and get refund by filing ITR after linking PAN with Aadhar.
20 February 2025
Thank You for your response.
20 February 2025
You are welcome.
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