Employee’s Provident Fund or EPF avails a good deduction on taxable income during online income tax return filing. EPF is a retirement benefit scheme which is maintained by he Employees Provident Fund Organization of India. Now, according to law, both the employer and employee need to contribute 12% of the basic pay into EPF account which generates and yearly interest rate of 8.75%. The interest rate is decided by the Indian government and the interest amount credits to the EPF account balance by 1st April of every year.
There are also benefits provisioned for EPF scheme under Section 80, which you can claim during online income tax return filing. It is totally tax free and you get a tax deduction for the whole amount according section 80C of Income Tax Act. The money must be deposited for 5 years and you can claim tax benefit for this specified period. The benefit limit also includes the money you invest, the yearly interest amount and the total amount withdrawn after 5 years. The tax benefits can be up to 30%, depending on your income tax slab and all this tax benefit can go void if you withdraw the amount before specified 5 years duration. On withdrawal before 5 years time limit, you have to pay tax for the whole amount during your online income tax return filing.
And top of the above rules, new TDS law has made the situation even worst for the early checkout people. Those who will withdraw EPF amount in earlier stage will have to pay a TDS rate up to 34.6% on the total amount. But, if the total amount is less than INR 50,000 then, no TDS will be deducted from the amount. If one doesn’t wish to pay for TDS, can fill in the Form 11 and submit to the employer to declare so. So before you start saving with EPF fund to get deductions during online income tax return filing, must consider the new TDS law and its clauses.