I am an NRI and want to withdraw my Employees’ Provident Fund (EPF) balance from India. I had completed five years of service with my previous employer. Will there be any additional Tax Deducted at Source (TDS) as the money will be transferred to NRO account?
Name withheld on request
An employee (Indian citizen) is eligible to withdraw PF under any of the following circumstances:
(a) on retirement from service after attaining the age of 55 years; (b) on retirement on account of permanent and total disablement; (c) on emigration from India for permanent settlement abroad; (d) Being unemployed in India for more than 2 months
An employee is eligible for withdrawal from the Pension Scheme (EPS) if he has not rendered 10 years or more service on the date of termination of employment in the form of a lump sum amount. The employee will be entitled to Withdrawal Benefit or can opt for Scheme Certificate. If an employee has rendered service of 10 years or more, then the employee will be eligible for monthly pension from EPS.
Thus, in your case, if your total contributory service in India is less than 10 years, you are eligible to withdraw a lump sum amount from EPS.
As you have continuous service of 5 years or more in India, withdrawal of accumulated balance till the date of termination will not be taxable in India.
Any interest on employer’s contribution and employee’s contribution after the date of termination of employment till the date of withdrawal is taxable in India.
As per the guidelines, if a person withdraws the provident fund after 5 years, there should be no TDS at the time of withdrawal. But EPFO can deduct tax on interest earned after the date of termination of employment.
I am an NRI and have Non Resident Ordinary (NRO) and Non Resident External (NRE) bank accounts in India. I want to know how can I transfer my NRO balance to my NRE account in the same bank.
Name withheld on request
Under the Exchange Control Act, you can transfer up to $1 million per financial year from your NRO account to your NRE account, subject to the documents requested by the bank. The Bank may request for documentary evidence to establish that Income Tax has been paid in India on the amount to be remitted.
Sonu Iyer is the Tax Partner and People Advisory Services Leader at EY India. Questions at mintmoney@livemint.com
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