TDS on EPF Balance Withdrawal – New Rules & Provisions 2016

EPF TDS notification: Are you planning to withdraw your EPF balance? Do you know the new tds on epf balance withdrawal (Tax Deducted at Source) rule has been applied for EPF withdrawal process?

As per latest update After Budget 2016-17, the previous EPF withdrawal limit of Rs 30,000 is now raised up to Rs 50,000. Means if you withdraw your EPF balance after June 1st 2016, you will not be charged TDS on withdrawal amount of Rs 50,000 or less.

When someone leave an organisation either he/she has to withdraw EPF or transfer EPF balance to new organisation. Till date there is no taxation rule applied while withdrawing your EPF money. But from this June 1st 2016, a new epf tds deduction rule has been applied for withdrawing of EPF balance more than 50,000 & when someone has not continued for 5 year. The previous epf withdrawal balance limit for TDS was rs 30,000 which is raised after Budget 2016-17.  For more details, please refer EPFO website.

What is EPF TDS circular on balance withdrawal

The rule is not that simple as various cases come into picture where people are confused whether to pay TDS or not. In this article I will try to answer all such FAQs related to new EPF withdrawal TDS rules.

Who has to pay TDS on EPF balance withdrawal?

The simple thumb rule is your withdrawal balance. If you withdraw 50,000 or more within 5 year of your service, then you have to pay TDS.

How To Avoid TDS on EPF Withdrawal

There are 2 cases to address this query.

  • If you have submitted your PAN number while withdrawing EPF money, you have to give 10% TDS. But in case you have submitted 15G / 15F form then there will be no TDS.
  • In case you have not submitted your PAN number, a higher TDS @34.608 % will be applicable.

Who need not to pay TDS on PF money withdrawal?

There are few cases in which one doesn’t have to pay TDS. These are

  • If you transfer your PF money from one account to another PF account.
  • In case you quit your job or career due to bad health or any medical reasons, you will not be liable to pay TDS.
  • In case your previous employer got shut down or their business got discontinued, you will not be responsible to pay any TDS on EPF money withdrawal.
  • If your EPF balance is less than 50,000, If you applied for withdrawal after completion of 5 years & if you have submitted 15 G/ 15 H form.

What is 15 G and 15 H form and why should one submit them?

These forms are for declaring your interest income from your investments, in case they combined with your net yearly income, doesn’t exceed the min income tax exemption limit. Form 15 G is for senior citizens & form 15 H is for individual or HUF.

But there is an upper limit to use this 2 forms. In case your withdrawal balance is more than Rs. 2,50,000/- and Rs. 3,00,000/, 15G and 15H will not be accepted respectively. This limit is decided every year as per the income tax slab.

Can NRI claim use these forms to get TDS exemption?

No, NRI can not submit form 15 G.

I have served more than 5 years, Do I have to fill form 15 G/ 15 H?

If your job is continuing for more than 5 years then you are not liable to show PAN number & form 15 G / 15 H while filling EPF withdrawal forms.

As per the rules, I think I don’t have to pay TDS. Does it mean my EPF withdrawal is tax free?

No. Interest earned on your EPF money will be considered as your taxable income. And you have to pay income tax as per current income tax slab, if you withdraw your PF balance before the expiry of five years of continuous service.

Do you have any more query regarding the new TDS rules related to EPF withdrawal? Are you facing any issue while calculating EPF taxation? Share your query & experience about this topic.

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  1. Hi, Thank you for the detailed article but I am still left with few doubts.
    When you stated ‘If PF amount is less than 50k and if you withdraw your PF balance before the expiry of five years of continuous service you need not pay TDS.’, did u mean the duration of the PF account irrespective of money has been credited continuously for every month or with with continuous deposit for 5*12=60 months ?
    Presently I am an NRI working with an one year visa in a foreign country and had served in an Indian company from April,2012 to August 2015.When coming to start with the application process I found out that in the new UAN based ‘form 19’ ,the ‘Reason for leaving service’ has two suitable options, ‘resigned’ and ‘permanently settled abroad’.I am not sure which to use. Also as per your article I can’t submit form 15G even though my service period was less than 5 years, and in such cases I need to provide them with copies of my visa and joining letter if I understand correctly?
    Also, as per my speculation my PF amount should be around 70k but I am unsure how the TDS will be applied because my income is nil for this year as there are no other source of income through property or anything.And if it is applied then it is only for the year I am withdrawing I hope? Not future years if I am not wrong?
    Also is it beneficial in any way if I decide to withdraw it after the completion of 5 years even though my PF amount is higher than 50k?

  2. hi santanu
    my name is manish singh tariyal and i was work with x company but till now i left this co.
    and i complet the pf form and submit also.but i got a message your form 10c and form 19 has been rejected. reason is your bank account no. not clear. so i want continue this process can you help me what i do santanu ji plz tell me.

  3. Hi Santanu I have query with regards to PF withdrawal and need your expert advice here ?

    I worked with co. X for 4 years and moved on to work with co. Y. Now its almost a year and my current employer has open PF account separately and they are not insisting me to provide UAN number that i got from my previous employer and i haven’t given then my UAN number yet.

    Now i approached my previous employer and requested for PF withdrawal and told them lie that i am currently unemployed and they agreed to proceed my request.

    So the question is will PF dept. get to know that whether currently i am working or not ? will i be able to withdraw the PF successfully without any hassle and what will be the TDS deduction and how much time it will take for withdrawal process

  4. I already submitted PF withdrawal claim before March 2015. Now they are asking for form no 15G. My question is that what will be the assessment year in my form 15 G? (2015-16?). now I am outside India from 4th June 2015. What will be my residential status? Can I file the form 15G?

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