Withdrew your EPF before completing 5 years? Here's how to report it in your ITR for AY 2026-27

Different parts of your EPF withdrawal are taxed differently

"If you withdrew your EPF balance before completing five years of continuous service, the withdrawal is generally taxable and must be reported in your ITR for AY 2026-27," said CA Abhishek Soni, CEO & Co-founder, Tax2win.

According to Soni, the employer's contribution to your EPF account, along with the interest earned on that contribution, should be reported under 'Salary Income'.

The interest earned on your own (employee's) contribution should be disclosed under 'Income from Other Sources'.

However, your own EPF contribution is not always taxable.

"Your own contribution is taxable only if you claimed a deduction under Section 80C for it in previous years. If you never claimed the deduction, this amount is not taxed again," Soni explained.

Here's how the tax calculation works

Suppose you withdraw ₹5 lakh from your EPF account after working for three years. Out of this, ₹2 lakh is your own contribution, ₹2 lakh is your employer's contribution, and ₹1 lakh is the interest earned.

• The employer's contribution and the interest earned on it will be taxed as Salary Income.

• The interest earned on your own contribution will be taxed under Income from Other Sources.

• Your own contribution will be taxed only if you had claimed a deduction under Section 80C in earlier years.

Check Form 26AS before filing your return

Another point taxpayers should not miss is the TDS deducted by the Employees' Provident Fund Organisation (EPFO), if applicable.

"If the EPFO deducted TDS on your PF withdrawal, generally 10% if your PAN was available and the taxable withdrawal exceeded ₹50,000, make sure you claim the TDS credit while filing your ITR," Soni said.

He advised taxpayers to verify the deducted tax in Form 26AS or the Annual Information Statement (AIS) before submitting their return.

"TDS is only a tax deducted in advance and not your final tax liability. Your actual tax payable or refundable will be calculated based on your total income and the applicable income tax slab," he added.

For taxpayers who have withdrawn their EPF balance before completing five years of continuous service, simply reporting the withdrawal as a lump sum in the ITR may not be sufficient. Since different components of the withdrawal are taxed under different heads of income, it is important to disclose each component correctly.