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Income Tax on EPF Withdrawal

Contribution towards an EPF account provides a benefit to individuals by way of a deduction under Section 80 C (see how here). It would also be good to know what would be the income tax implications of EPF withdrawal. Interestingly, EPF withdrawal is taxable under certain circumstances and exempt under the certain circumstances.

The following table will help you easily understand the taxability on withdrawal of EPF:

 

Serial No Scenario Taxability
1 Amount withdrawn is < Rs 50,000 before completion of 5 continuous years of service No TDS.

However, If the individual falls under the taxable bracket, he has to offer such EPF withdrawal in his return of income

2 Amount withdrawn is > Rs 50,000 before completion of 5 years of continuous service TDS @ 10% if PAN is furnished;

No TDS in case Form 15G/15H is furnished

3 Withdrawal of EPF after 5 years of continuous service No TDS.

Further, the individual need not offer the same in the return of income as such withdrawal is exempt from tax

4 Transfer of PF from one account to another upon a change of job No TDS.

Further, the individual need not offer the same in return of income as it is not taxable.

5 Before completion of 5 continuous years of service\ if

employment is terminated due to employee’s ill health

The business of the employer is discontinued

or the reasons for withdrawal are beyond the employee’s control

No TDS.

Further, the individual need not offer the same in the return of income as such withdrawal is exempt from tax

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