Employees' Provident Fund is a savings plan established by the government for employees of the formal sector who work in companies with 20 or more employees. It functions as an excellent retirement plan as well as an emergency fund when necessary. The Employees Provident Fund Organization (EPFO), a governmental agency established by the Employees' Provident Fund Act of 1956, announces the EPF interest rate each year.
In April 2022, the Employees' Provident Fund Organization issued new regulations on taxation and deductions on retirement accounts for employees. The board maintained the Rs. 5 lakh cap for government employees while introducing a new tax structure on PF payments beyond Rs. 2.5 lakh for employees in the private sector.
According to the circular, TDS would be deducted at a rate of 10% if the EPF account is linked to a valid PAN or at double the rate of regular TDS i.e. 20%, if the EPF account is not linked to a valid PAN. TDS levels will remain constant even in death situations.
Steps to link PAN with your EPF account
- Using your UAN credential, log onto the EPFO portal.
- Select the KYC option from the "Manage" menu.
- In order to link your EPF account with "PAN," the browser will direct you to a new page.
- Enter your name and PAN number after clicking "PAN," then click "Save."
- Your PAN is promptly verified if your name and number match the information in the IT department.
Employees should connect their Permanent Account Number (PAN) to their EPF to prevent having too much tax withheld at source (TDS). Every taxpayer who receives taxable income must provide their PAN to the payer in accordance with Section 206AA of the IT Act.