To avoid having too much tax withheld at source, employees should link their Permanent Account Number (PAN) to their EPF (TDS). Section 206AA of the IT Act mandates that every taxpayer who receives taxable income give their PAN to the payer (EPFO). TDS will be deducted at a rate of 10% if the EPF account is linked to avalid PAN, or double the rate of normal TDS, i.e. 20%, if the EPF account is not linked to a valid PAN, according to the circular issued by EPFO on April 6, 2022. TDS levels will be the same in death instances as well.
According to the EPFO circular, “For each day that the failure continues, you will be charged Rs.200. Late fees, on the other hand, must not exceed the amount of TDS. Every taxpayer who receives taxable income is required by section 206AA of the IT Act to provide their PAN to the payer (EPFO). If a PF account is linked to a valid PAN, TDS will be 30% or the tax rate stated in the DTAA (Double Taxation Avoidance Agreement), whichever is more advantageous to the PF member.
If a PF account does not have a valid PAN, TDS will be 30% or the tax rate stated in the DTAA (Double Taxation Avoidance Agreement), whichever is more favourable to the PF member. According to the new circular, if the PF Account is not linked with a valid PAN, tax shall be deducted at the higher of the following rates:
- at the rate specified in the relevant provision of 206AA of the IT Act; or
- at the rate or rates in force; or
- at the rate of twenty per cent: (Ref. section 194 A read with section 206 AA of Income Tax Act).
How to Link PAN With an EPF Account Online?
- Login EPFO portal, using your UAN credentials
- Click on the KYC option under “Manage”.
- The browser will take you to a new page where you can link your EPF account with “PAN.”
- Click on ‘PAN’ and enter your name as per PAN and number.
- Click on ‘Save’
If your name and number match the data in the IT department, your PAN is instantly confirmed. Once your PAN has been appropriately linked with your PF account, it will display in your ‘Member Profile’ table.