All About TDS on PF Withdrawal in 2025

As per Income Tax Rules, TDS applies to income from other sources. EPF withdrawal might or might not attract TDS, based on the tenure of continuous service of the member and the time of withdrawal. The applicable TDS on PF withdrawal depends on PAN card submission as well. If you do not submit your PAN card, the rate of TDS deduction is higher. Learn in detail about the TDS applicability on EPF withdrawal and how to avoid it in a planned manner.

Eligibility for EPF Withdrawal

Here are the eligibility criteria to withdraw PF:

• If you have attained the retirement age of 55 years, as set by EPFO, you can withdraw the entire amount.
• You can withdraw 90% of your EPF amount a year before retirement, provided you have attained the age of 54 years.
• A member can withdraw 75% of the EPF amount after 1 month of unemployment while the remaining 25% is transferred into the new employer’s PF account.
• After 2 months of unemployment, you can withdraw the entire PF amount.
• If your Aadhaar number is linked to UAN and approved by your employer, you can withdraw the EPF amount without additional consent from the employer.

Reasons for Partial EPF Withdrawal

You can withdraw EPF for multiple purposes as detailed by the Employees' PF Organisation. These purposes might include medical purposes, education, marriage, construction of house, purchase of land and house, house renovation and home loan repayment.

Tax on EPF Withdrawal

EPF includes the employee's contribution, the employer's contribution and the interest earned on these contributions. If you have claimed a deduction under Section 80C for your contributions in previous years, you may be required to pay additional tax as though you had not claimed the 80C deduction for those years.

On the flip side, an employer's contribution and the interest earned on it are taxable. Form 26AS reflects this TDS deduction under the salary TDS head.

Tax on EPF Withdrawal Before 5 Years

Withdrawal of PF before completing 5 years of service attracts Tax Deducted at Source. However, if the PF amount is less than ₹50,000, there will be no TDS deduction. 5 years of service includes all employers within the period. For PF withdrawal after 5 years, there is no TDS applicable. Notably, the tenure needs to be 5 years exactly without any grace period.

Tax on EPF Withdrawal By Temporary Employee

If you join a company as a temporary employee or on a contractual basis, your employer will not be liable to contribute to EPF. As a result, TDS rules do not apply. However, if your employer hires you as a permanent employee, TDS on EPF applies based on the 5-year service completion rule.

Tax on EPF Withdrawal from an Unrecognised EPF

If the Income Tax Commissioner does not approve a provident fund, it is termed unrecognised PF, even if the Commissioner of PF or other formal authority approves it. Notably, if you want to enjoy the Income Tax benefits, the fund needs to be recognised by the Income Tax Commissioner. 

In such a case, withdrawal after 5 years of continuous service does not attract TDS. If you are a member of an unrecognised Provident Fund (URPF), income tax applies, irrespective of whether you have completed 5 years of continuous service. 

Tax on EPF Withdrawal After 5 Years

As per EPFO and tax rules, there is no TDS deduction, if you withdraw PF after 5 years of completing services. Notably, 5 years of service includes all employers within the tenure.

TDS Rules for PF Withdrawal

The following table illustrates the TDS applicability on PF withdrawal:

How to Avoid TDS Deduction on EPF?

You can follow the ways mentioned below to avoid TDS deduction on EPF withdrawal:

• Transfer your EPF when you switch jobs rather than withdrawing it to avoid a TDS deduction.
• Deferring PF withdrawal and withdrawing it after 5 years of service completion, can effectively help you avoid TDS.
• You can choose to withdraw a PF amount below ₹50,000 to avoid a TDS deduction.

Final Word

TDS on PF withdrawals depends on whether you withdraw before or after completing 5 years of continuous service, and also on the withdrawal amount, which is ₹50,000. To reduce the TDS deduction, make sure to submit your PAN card details. Alternatively, you can avoid TDS deductions by transferring your EPF when switching jobs or by withdrawing after completing 5 years of continuous service.

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