Question

For the Assessment Year 2020-21, Section 192A provides for deduction of tax at the rate of ______ on premature taxable withdrawal from the employees' provident fund scheme.
1. 15 percent
2. 20 percent
3. 10 percent
4. 5 percent

Answer 1

Correct Answer - Option 3 : 10 percent

The correct answer is 10 percent

Section 192A of the Income Tax Act of 1961 is primarily concerned with TDS (Tax Deducted at Source) on provident fund withdrawals. This section is especially new, given it was just recently added to the Income Tax Act.

Deduction of TDS on withdrawal from Provident Fund: TDS would be deducted at source if the accumulated balance at the time of withdrawal is more than Rs. 30,000 and the PF account holder has spent less than five years in an organisation, according to the requirements incorporated in this new section.

TDS will be deducted as per the following rates:

• TDS will be deducted at 10%, provided PAN is submitted. However, if the provident fund holder furnishes Form No. 15G or 15H, then no tax will be deducted at source.
• If a person fails to submit PAN or Form No 15G or 15H, then tax will be deducted at source at the maximum marginal rate.