How NRIs can switch steadiness quantity from provident fund

What are the restrictions on transferring the steadiness accrued in an Worker Provident Fund (EPF) to an non-resident abnormal (NRO) account? My try to deposit my PF quantity into my non-resident exterior (NRE) account was rejected by the financial institution. Additionally, one of many financial institution staff stated it can’t be deposited in my NRO account both. What are the federal government tips relating to such switch?

—Sreenivasa Rao Kagolanu

Below the revenue tax regulation, the accrued steadiness due and changing into payable to an worker taking part in a acknowledged provident fund is excluded from computation of whole revenue below the next circumstances:

a. If the worker has rendered steady providers with this employer for a interval of 5 years or extra; or

b. If the service has been terminated by motive of the worker’s ill-health, or by the contraction or discontinuance of the employer’s enterprise or different trigger past the management of the worker;

c. If, on the cessation of his employment, the worker obtains employment with every other employer, to the extent the accrued steadiness due and changing into payable to him is transferred to his particular person account in any acknowledged provident fund maintained by such different employer; or

d. If your complete steadiness standing to the credit score of the worker is transferred to his NPS (Nationwide Pension Scheme) account

Assuming you could have rendered steady service of 5 years or extra, the withdrawal of accrued provident fund steadiness is just not answerable for tax as per the above and accordingly, there ought to be no requirement for TDS. Nonetheless, any curiosity earned put up cessation of employment until date of withdrawal might be liable to tax.

Below the change management regulation, a person qualifying as non-resident Indian (NRI) might open a NRE account or NRO account. As per Schedule 3 of the International Trade Administration (Deposit) Rules, 2016, the NRO account could be credited for the next quantities:

a. Proceeds of remittances obtained in any permitted foreign money from outdoors India via banking channels or any permitted foreign money tendered by the account holder throughout his momentary go to to India or transfers from rupee accounts of non-resident banks.

b. Reliable dues in India of the account holder.

c. Transfers from different NRO accounts.

d. Any quantity obtained by the account holder in accordance with change management regulation.

The provident fund withdrawal proceeds could also be construed as respectable dues and accordingly, credit score of provident fund withdrawal proceeds could also be a permissible credit score to the NRO Account. Accordingly, you could request the provident fund Authorities to switch the withdrawal proceeds to your NRO checking account.

Sonu Iyer is tax associate and other people advisory providers chief, EY India.

Catch all of the Enterprise Information, Market Information, Breaking Information Occasions and Newest Information Updates on Stay Mint. Obtain The Mint Information App to get Every day Market Updates.
Extra Much less

Up to date: 14 Jun 2023, 11:07 PM IST