PF Tax rules

There are tax rules for the Employees' Provident Fund (EPF) and below we have summarized some of them: 

  1. EPF withdrawal shall be taxable in case the employee has not rendered continuous services for a period of at least 5 years.
  2. In case the employee changes his job, and EPF is transferred to the new employer, then this new employment period is also taken into consideration while calculating the continuous five years period.
  3. If the period of continuous service is less than 5 years, the total of employer’s contribution and interest earned thereon shall be taxable under the head “Income from Salaries”.
  4. The employee’s own contribution is eligible for tax exemption under Section 80C of the Income-tax Act.


Taxation on EPF Withdrawal

  1. On withdrawal before completing 5 years of service TDS is deducted
  2. TDS of 10% will be deducted on withdrawal if PAN is furnished and 34.608% if PAN isn't furnished
  3. However, no TDS will be deducted if the withdrawal amount is less than Rs. 50,000, 


However, TDS isn't applicable for some of the below cases-

  1. TDS rule is not applied when the termination of the individual's service is out of their control. Company lockouts, retrenchments and employee layoffs etc. can be some of the reasons
  2. TDS is also not applicable when the service cannot be continued due to serious medical conditions like physical disability or mental disability

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