Tax on EPF Withdrawal: Calculate TDS on EPF – Provident Fund

Tax on EPF Withdrawal: Calculate TDS on EPF – Provident Fund

The Employee Provident Fund (EPF) is a tax-free saving of the employees. If you are planning to withdraw the EPF amount before the 5 years of your job service, then you have to pay the tax. YES! It is taxable and you have to do the tax deduction. After the completion of your 5 years in job service, you need not pay the tax.

Tax on EPF Withdrawal

Tax on EPF Withdrawal

Previously the proposal was made with tax 60% on the PF withdrawal, but it was withdrawn. So, in this article, we will be talking about the new tax deduction on PF withdrawal and how to calculate TDS on EPF followed by the upheavals in TDS as well as EPF interest rate. This post is specifically about the latest rules for Tax on PF withdrawal.

After the 5 years of service, the tax on the EPF amount withdrawal was completely exempted till now. But the Government of India stirred it while making the changes in the budget 2016. The 60% tax was proposed in February 2016 and it was said that the proposal will be implemented from April 2016. But it was strongly protested and the government had to withdraw the same.

The protests by the salaried middle class, opposition parties, and labor unions forced the Finance Minister to roll back the proposal. This move actually bought NPS at a bar with EPF where 40% of NPS withdrawal has been now made tax-free on maturity. These updates are significantly useful for the working people and here we have listed all the details about the same.

Tax Exemptions on PF Withdrawal

The conditions which are applied for imposing the tax on PF withdrawal includes:

  • PF withdrawal before 5 years of service
  • The withdrawal amount more than 30,000 INR

No tax would be imposed if the PF withdrawal amount would be less than 30,000 INR even before the 5 years of job service. We have covered everything in another article detailing about how you can check the PF status before making withdrawal along with the EPF balance inquiry.

After the completion of 5 years of service, no tax will be imposed on the PF withdrawal. There is a minimum period of tax deduction over all the investment schemes. The withdrawal of the tax imposed on the PF amount withdrawal came as a relief, especially to the salaried class people. Even if people apply to withdraw the EPF amount before the minimum membership period, there will be no imposition of TDS over the same.

TDS Calculation on PF Withdrawal before 5 Years

You will be imposed with a tax if you will withdraw the EPF amount before the completion of your 5 years of service. But there are a number of conditions where you can withdraw the amount without levied with a tax deduction even before the lock period. So, if you want to withdraw the EPF amount, then you can download the PF withdrawal form.

No TDS on PF withdrawal at all (before 5 years) in following conditions:

  • PF amount transferred from one pF account another
  • Employee terminated from the service
  • PF amount less than 30,000 INR
  • PF amount is more than or equal to 30,000 INR, but employee submits the Form 15G/15H and PAN card

Tax Deduction for withdrawal before 5 years:

  • If the employee submits the PAN card but not the Form 15G/15H, then the tax on PF withdrawal will be 10% (amount equal or more than 30,000 INR)
  • No submission of PAN card, the tax on PF withdrawal will be 34.608%

The tax will be deducted only at the time of payment. The Form 15H is applicable for the senior citizens above 60 years of age. The Form 15G is applicable for the individuals without the taxable income. Remember to fill the PAN number while submitting the Form 15G/15H.

If you have any question regarding the Tax on PF withdrawal, then don’t hesitate while leaving your queries in the comment section below. The Tax on PF withdrawal is one of the major concerns of the salaried people who leave their job for one or the other reasons. The Ministry of Finance updates the PF rules every year. You can even register at the official EPFO portal to resolve the issues regarding the PF withdrawal.

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