EPFO rules on TDS for EPF withdrawal: When your PF money is taxed

By Upstox News Desk

3 min read | Updated on May 11, 2026, 15:23 IST

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SUMMARY

EPFO explains the rules on TDS for EPF withdrawal, including when tax is deducted based on service period, PAN details, withdrawal type, and claim conditions. Know how EPF withdrawals are taxed as per official guidelines.

From tax year 2026–27, a new Form 121 will be required to claim TDS exemption on EPF withdrawals. | Image: Shutterstock.

The Employees’ Provident Fund Organisation (EPFO) has issued instructions explaining the applicability of Tax Deducted at Source (TDS) on Employees’ Provident Fund (EPF) withdrawals.

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According to the instructions, TDS on EPF withdrawals depends on specific conditions such as the member’s length of continuous service, availability of Permanent Account Number (PAN), and the amount being withdrawn.

The document states that EPF withdrawals made after completion of five years of continuous service are not subject to TDS, subject to applicable provisions. Where the period of continuous service is less than five years, TDS applicability is determined based on prescribed conditions including the nature and amount of withdrawal.

The instructions further state that PAN is required for processing EPF withdrawal claims. In cases where PAN is not furnished, TDS may be deducted at higher rates as per applicable income tax provisions.

The document also refers to Form 15G and Form 15H, which may be submitted in eligible cases as per income tax rules to seek non-deduction of tax at source, where conditions are satisfied.

EPFO has outlined these instructions to provide clarity on the conditions under which TDS is applicable on EPF withdrawals. The guidelines cover different scenarios based on service duration, PAN availability, and eligibility criteria for tax deduction.

The instructions aim to standardise the process of determining TDS applicability on EPF withdrawals under existing provisions.

Condition	TDS Applicability
Withdrawal after 5 years of continuous service	No TDS applicable (subject to provisions)
Withdrawal before 5 years of service	TDS applicable based on prescribed conditions (nature and amount of withdrawal)
PAN furnished	TDS deducted at normal applicable rates
PAN not furnished	TDS deducted at higher rates as per income tax provisions
Submission of Form 15G / 15H	Can be submitted in eligible cases to seek non-deduction of TDS

( Source: epfindia.gov.in)

PF withdrawal rule change from Tax Year 2026–27

The government has updated the process for claiming TDS exemption on EPF withdrawals starting from the tax year 2026–27.

Earlier, subscribers could use Form 15G or Form 15H to avoid TDS on EPF withdrawals if they met the required conditions. However, these forms will no longer be valid for this purpose going forward.

From tax year 2026–27, a new Form 121 will be required to claim TDS exemption on EPF withdrawals. This replaces the earlier forms under the updated Income Tax framework.

The change is aimed at simplifying and streamlining the process for tax deduction and exemption on provident fund withdrawals.

Meanwhile, the EPFO has also been focusing on faster processing of claims. According to recent official data, a large share of advance withdrawal claims is now being settled through automated processing within three days. Around 71% of advance claims have been processed through auto mode within this timeline, reflecting increased use of digital systems for claim settlement.

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