• twitter-icon
Unlimited Tax Return Filing


Tax on PF Withdrawal: New PF Withdrawal rules

The approach behind the Employee Provident Fund (EPF) scheme is to provide significant benefit to the employees at the time of their retirement. The scheme specifies that a nominal amount is deducted from the salary of an employee as a contribution towards the fund. According to the latest circular, which has got affected from June 1, 2015, changes have been made regarding the Income-tax rules on the EPF withdrawal by one of the biggest retirement funding associations worldwide, Employee Provident Fund Organization (EPFO).

(Update: Budget-2016)

Payment of an accumulated balance to pay an employee from PF, the threshold limit increased from Rs. 30,000 to limit Rs. 50,000. So, TDS is not applicable if PF withdrawal amount is less than Rs 50,000.

PF Withdrawal Rules associated with TDS

Cases where TDS is not applicable

  • If the amount, which is to be withdrawn as PF is less than Rs. 30000 Rs. 50,000.
  • No tax on pf Withdrawal after 5 years or more of continuous service.
  • If an employee withdraws an amount of more than or equal to Rs. 30000 Rs. 50,000 before 5 years but submits Form 15G /15H along with his / her PAN.
  • When a transfer of PF is from one A/c to another A/c.
  • Being an EPF member, if the service has been terminated due to ill-health and he withdraws his accumulation (balance).
  • If the employer discontinues the business or any cause beyond the control of EPF Scheme’s member (Employee).

Cases where TDS is applicable

When accumulation is more than Rs. 30000 Rs. 50,000 and the employee i.e. the EPF member has worked less than 5 years, then two cases are there:

  • Deduction of TDS will be at 10% if PAN is submitted, but 15G/15H Forms are not.
  • Deduction of TDS will be at maximum marginal rate i.e., 34.608% if PAN is not submitted.

 

TDS on EPF Balance Withdrawal- Flowchart

Flowchart: TDS on EPF Withdrawal

 Some other important key points:

  • If the subscriber has submitted all the required forms, then he/she will get an exemption from TDS with no taxable income.
  • TDS will be deducted under Section 192A of Income Tax Act, 1961 and it is deductible at the time of payment.
  • Form 15G and 15H are self-declarations and may be accepted in duplicate.
  • If the amount of withdrawal is beyond 2,50,000 or 3,00,000 respectively, then Forms 15G and 15H cannot be accepted.

Disclaimer:- "All the information given is from credible and authentic resources and has been published after moderation. Any change in detail or information other than fact must be considered a human error. The blog we write is to provide updated information. You can raise any query on matters related to blog content. Also, note that we don’t provide any type of consultancy so we are sorry for being unable to reply to consultancy queries. Also, we do mention that our replies are solely on a practical basis and we advise you to cross verify with professional authorities for a fact check."

Published by SAG Infotech
All posts have been written by the research and best practices. We are not responsible for any confusion. We always try to give best information to the readers. View more posts
SAGINFOTECH PRODUCTS

Join the Conversation

111 thoughts on "Tax on PF Withdrawal: New PF Withdrawal rules"

  1. I left my company in India in Feb’24 and moved abroad. I worked for my last company in India for around 8 years and now I would like to withdraw my PF. Please let me know the procedure to Withdraw the PF and will this amount tax exempted?

  2. Hi sir my father is working in a factory for 40 years and 4 years of working period is left and he wanted to withdraw his pf amount( excluding pension) for house construction. so if he withdraws the complete amount at once( having left his working period left) any tax or TDS is applicable for it and for such purpose which form should be filled, how much tax it would be please kindly knowledge me in this regard.

Your email address will not be published. Required fields are marked *

Latest Posts

Best Offer in 2025

Powering India's Taxation Experts with Innovation

Upto 20% Off
Tax, ROC/MCA, XBRL, Payroll, Online GST

Limited Offer, Hurry

New Tax Offer 2025

Upto 20% Discount on Tax Software

    Select Product*

    Genius Software