EPFO (Employees Provident Fund Organization) has issued a new circular relating to applicability of TDS (Income Tax deduction at Source) on EPF withdrawals. These new provisions are effective from 1st June, 2015. TDS is applicable on EPF withdrawal where accumulation (balance) is more than Rs 30,000 and the EPF member (Employee) has worked less than Five years.
(Budget 2016-17 update : In case of payment of accumulated balance due to an employee in EPF, the TDS limit is being raised from Rs 30,000 to Rs 50,000. So, TDS is not applicable if the PF withdrawal amount is less than Rs 50,000. This new TDS thresh-hold limit will be effective from 1st June, 2016 onwards. Click on the below image to download EPFO’s latest notification on this new amendment.)
As per EPFO’s circular, “the Finance Act, 2015 (20 of 2015) has inserted a new section ‘192A’ regarding the payment of accumulated provident fund balance due to an employee. The provision shall take effect from June 1, 2015.”
EPF Withdrawals – Provisions related to TDS
TDS is not applicable in the following cases;
- On Transfer of PF from one account to another PF account (EPF A/c) .
- On Termination of service due to ill-health of EPF member and withdraws his/her accumulation.
- On discontinuation of Business by the Employer or any cause beyond the control of EPF Scheme’s member (Employee).
- If PF withdrawal amount is less than Rs
30,000(new limit is Rs 50,000). - If employee withdraws amount more than or equal to Rs.
30,000/- (Rs 50,000), with service less than 5 years but submits Form 15G /15H along with his / her PAN.
TDS is applicable in the following scenarios;
- If employee withdraws amount more than or equal to Rs.
30000/- (Rs 50,000), with service less than 5 years, then:
a) TDS will be deducted @ 10% if Form-15G/15H is not submitted provided PAN is submitted.
b) TDS will be deducted @ maximum marginal rate (i.e., 34.608%) if employee fails to submit PAN.
Below is the flowchart to understand these implications.
Other Important points;
- TDS (Tax Deducted at Source) is deductible at the time of payment. TDS will be deducted under Section 192A of Income Tax Act, 1961.
- Form 15H is for senior citizens (60 years & above) and Form 15G is for individuals having no taxable income. Form 15G & 15H are self declarations and may be accepted as such in duplicate. (Do note that not every individual or HUF can submit Form no 15 G. Only the individual / HUF, whose tax on the estimated income for the year is NIL and the amount of interest income from all the sources / securities does not exceed the minimum exemption limit, can submit Form 15 G form. NRIs can not submit Form 15G)
- EPF Members must quote PAN in Form No.- 15G / 15H and in Form No. 19 (EPF Withdrawal Form).
- Members who have rendered continuous service of 5 years or more, including service with former employer, shall not be required to submit PAN and Form No. 15G/15H along with Form No. 19.
- Similarly, members whose service has been terminated due to his ill health, contraction or discontinuance of business of employer or other cause beyond the control of the member shall not be required to submit PAN, Form No. 15G/15H along with Form No. 19. In such cases, no income tax (TDS) shall be deducted as per Rule 8 of Fourth Schedule to the Income Tax Act, 1961.
- Form Nos. 15G and 15H cannot be accepted if amount of withdrawal is more than Rs. 2,50,000/- and Rs. 3,00,000/- respectively.
- If TDS is not applicable then it does not mean that the EPF withdrawals are not taxable. Do note that, if you withdraw your PF balance before the expiry of five years of continuous service, then it is taxable in the year in which withdrawal has happened. In addition to this, your employer’s contributions along with the accumulated interest amount will be taxed as “profits in lieu of salary”. Interest accumulated on your (employee) contributions will be taxed under the head “Income from other sources”. The tax deductions claimed on your contributions will be revoked or rolled back, and shall be liable to tax.
These new amendments may discourage pre-mature PF withdrawals and may promote long-term savings.
Latest Update (20-Apr-2016) : “Govt rolls back new EPF withdrawal norms and old system will continue. The notification which was issued on 10th Feb, 2016 has been cancelled.” So, the existing rules will be continued..
Latest Update (18-April-2016) : The Minister of state for Labour and Employment (Independent charge) now decides to postpone the date of implementation of new conditions for EPF withdrawal to 1st August 2016. This was earlier planned for implementation from 1st May 2016.
Budget 2016-17 New EPF Rules : Latest News (08-March-2016) : The Budget 2016-17 proposal of levying income tax on 60% of EPF balance has been withdrawn by the government. So, no tax will be levied on PF withdrawals at the time of retirement. The other Budget proposal to make 40 per cent of the total withdrawal from the National Pension Scheme (NPS) will however remain unchanged.
Budget 2016 New EPF Rules : Latest News (01-March-2016) : As per the Budget 2016 proposal, at the time of retirement, 40% of the EPF lump sum withdrawal is tax-exempted, 60% of the corpus is taxable as per the applicable Income Tax Slab. To avoid this, the EPF member has to invest this 60% balance in an Annuity life insurance product. The Annuity income will be Tax-free. Click here for more details..
Latest News (24-Feb-2016) : New EPF Withdrawal Rules w.e.f 10-Feb-2016. Full PF balance withdrawal is not allowed till the retirement age. Click here for more details..
Latest News : You can now submit PF new claim forms directly to EPFO office without your Employer’s attestation.New Form 31 UAN, Form 10c UAN & Form 19 UAN. Click here for complete details.
Continue reading other EPF related articles;
- All you need to know about EPFO’s Universal Account Number (UAN)
- How to transfer your EPF funds online through OTCP & UAN Member Portal?
- How is interest calculated on EPF Account – Components & Illustration?
- How to track in-operative EPF account through EPFO’s online Helpdesk?
- EPFO SMS Service – Get your EPF A/c Balance as SMS
- Download new Form 15G & Form 15H
- How to fill Form 15G / Form 15H?
- How to check online if my Company is depositing my EPF amount on a monthly basis?
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1. If there is a gap in contribution, in which year ITR is the taxable interest income to be reported ? In year of accrual or in year of withdrawal or both are possible ?
2. To calculate taxable period of non contribution, should exact dates be used or Wage Month can be used ? For eg. DoE from first employer is 9th of the March, gap of some months and current employer DoJ is 5th of October.
3. If first employer worked for 15 years, gap of 2 years, then started working again, would the continuous service calculation consider the first employer also ?
Dear Mr. Reddy, I worked in a company between the year 2010 – 2015, left the job and went to abroad. Service period was 05 years and 02 months.
My UAN is active but the company is closed.
Now I want to close my PF a/c and withdraw full amount but in KYC, PAN is not linked with UAN. Any TDS will be imposed if I go for claim the full amount with Form 15G, its more than 04 lakhs. Please advise. Thank you.
My continuous service is 8 years and 7 months recently i withdrawn my pf after retirement ,PF dept has deducted 10% TDS saying that your establishment has not open new pf account after your rejoining the company after3days (AS i got retired at the age of 58 years ,but rejoined the company and there is no disruption in PF payment )
they also said that your company has not mentioned your exit date from pf contribution now how can i claim refund of TDS
Dear Madan ji,
You can file ITR and can claim it (if eligible).
Related articles :
Tax Implications of EPF, PPF & NPS Withdrawals (Full / Partial) & Maturity proceeds
Hi,
I’m not eligible for 15G (my income for 2021-22 is taxable) and my PAN details are already available under KYC. I tried withdrawing on EPFO portal.
Service < 5 years (ended in 2019)
Amount (only PF) – 55000 approx
PAN available
15G – cannot attach as I have taxable income in new company
Claim rejected – reason – Form 15G not attached.
Please explain what can be done.
Dear Sakshi,
If you are currently employed and contributing to the EPF scheme, you may kindly get the PF funds transferred from your previous EPF a/c to new EPF account.
Related articles :
* Online EPF Transfer | How to transfer PF funds to another EPF account Online?
* What happens to EPS on Transfer of EPF account (or) when you switch Jobs?
Hello sir,
I worked for 2 company and if i calculate my total service it is
in first company – 4 th july 2016 to 20 jun 2018
in 2nd company – 26th june to 30th june 2021
if i withdraw my pf is it taxable . please guide me
Dear Amit,
What is the work exp period in 2nd company?
Did you get the funds transferred from 1st to 2nd EPF a/c ??
Related article : Tax Implications of EPF, PPF & NPS Withdrawals (Full / Partial) & Maturity proceeds
No Sir,
I have not transferred the fund from 1st company to 2nd company.
My concern is i worked for 1st company for 1 years 11 months 20 days(4 th july 2016 to 20 jun 2018) and in 2nd company 2 years 11 months 26 days (4th july 2018 to 30th june 2021). but if i consider i have contributed to epf for 5 yeas ( exactly 60 months ) but if i count day wise its 15 days less in 5 years.
so could u pls help me to understand if i withdraw the pf is it taxable.
Dear Amit,
Only if you consolidate the two EPF accounts then cumulative service period is counted.
If your service period is 5 years, the total EPF claim would be tax-exempt.
In case, for any reason, the EPFO deducts any TDS, you can claim it as REFUND (if any) by filing ITR.
I have worked in a company from 2011 to 2020 But company gave me 3 days break as my PF contribution was continued . On my retirement in 2020 company HR department by misunderstanding put my date of exit 2015
So when I applied for final withdrawal of PF , TDS was deducted @ 10%
Now is it possible to get the refund of TDS
Dear Madan,
3 days break? I am unable to understand your query?
An EPF member can now update Date of Exit online.
1) Log in to the EPFO portal with your UAN (Universal Account Number) and password.
2) Go to “Manage” section and click on “Mark Exit”. You will then get the option to choose your PF account number from the “select employment” dropdown menu.
You cannot mark your date of exit before two months of leaving the company.
yes you can take ur tds amount 7406698205 call me
Dear madam,
My claim is rejected by pf office with remark ” claim rejected.Amount 10 lac above please submit member detail and service through employer.
Prior I have submitted claim on line on EPFO portal.
My company is closed.pl suggest what to do
Sir,
My service is more than 12+ years and PF accumulations as per passbook are as under:
Employee share: 1,07,297/-
Employer share: 32,801/-
EPS : 58,469/-
———–
Total 1,98,567/-
Further, my Aadhaar is linked and shows verified in home page of member portal. But, my PAN is linked and PAN number reflects in home page of member portal, but is not showing PAN is verified.
Shall I apply for withdrawal even though my PAN is not verified. Will TDS be deducted in my case? Form No.15G is required?
Kindly reply.
Dear SB,
Even if TDS gets deducted, you can claim it as REFUND when you file your ITR, as epf claim amount is tax free if service period is more than 5 years.
I worked for same employer from Dec 2008 till Nov 2017. But I discontinued the job for some months in between, from Feb 2012 to Dec 2012.
The current EPF account shows joining date as 01-01-2013, it is when I started the job again for the employer. I wanted to claim the EPF amount now as I am relocated our of India. As the second term of my employment is only 4 years and 11 months, will I be taxed after withdrawal? Or the EPF duration will be calculated from 2008, when I joined the employer initially? Although my currernt EPF statement does show the transfer of amount from my initial EPF account.
Dear VS,
Do you mean to say that your employer had created two EPF accounts during the period 2008 and 2017?
If the transfer has successful been done, your service period gets carried forward and its considered as more than 5 years ..such claim amount is tax-free income.
But, the interest amount during the non-contribution period(s) is a taxable income.
Related articles :
* EPF Interest Income & Withdrawals | Tax Implications | Is EPF Interest taxable?
* Why should you Withdraw Old EPF Account Balance? | In-operative EPF A/c Timeline
Thanks for replying. I worked for this employer from 2008 till 2012. Then I took a break of 10 months and then again join this employer from Jan 2013. As there was a gap of 10 months and my second term from 2013 till 2017 is 4 years and 11 months, will the amount be taxed?
Hello Sir,
I have a query, we have 2 staff who has joined us recently, one who was earlier working in various banks for more than 20 years. He has left his service for more than 3 years and joined us. Would he be coming under PF with us. The other whom we pay more than Rs. 25000 has joined from another company, where there was no deduction of PF, would PF be applicable to him?
Dear Josephine,
Kindly consult a CA/CS in this regard.