TDS on EPF withdrawal – When and how it is applicable? 6 lesser know facts

Will your Employees’ Provident Fund (EPF) withdrawal be subjected to deduction of income tax or Tax Deducted at Source (TDS) and under what circumstances? The Employees’ Provident Fund Organisation (EPFO) allows withdrawal EPF. However, the withdrawal is subjected to TDS if the period of service is less than 5 years and accumulated amount is more than Rs 50000.

TDS shall be applicable on the following rates:

1) Submission of PAN: If 15G / 15H is submitted, no TDS is deducted. If 15G/15H is not submitted, TDS deducted is at 10 per cent.

2) No submission of PAN: TDS is deducted at Maximum Marginal Rate of 34.606 per cent.

3) No TDS is deducted in case of transfer of fund, payment of advance, service is terminated by employer beyond control of employee.   

Here are 5 lesser known things about TDS on EPF withdrawal:

1) TDS shall not be deducted if service rendered is 5 years or more. The service rendered with all the previous and current employment will be added to arrive at the total service.

2) TDS will be applicable in case of PF final settlement, transfer claims, on transfer from exempted establishments to EPFO and vice versa, on transfer from one Trust  on another, past accumulations transfer, at the time of annual accounts processing, on back period accounting after accounts for year 2021-22 are processed in accordance with the Ministry of Finance notification G.S.R. 604(E) dated 31 August 2021.

3) TDS will be applicable in case of death cases as in cases of live members.

4) Tax Deposited at Source is to be deposited using Challan ITNS-281.

5) Penalty on not filing TDS: RS 200 for every day during which the failure continues. The amount of late fees, however, shall not exceed the amount of TDS.

6) The date of filing fee of TDS statement / return:

• April-June – 31st July
• July-September - 31st October
• October-December – 31st January
• January-March – 31st May

EPFO is one of the World's largest Social Security Organisations in terms of clientele and the volume of financial transactions undertaken. At present it maintains 24.77 cr accounts (Annual Report 2019-20) pertaining to its members.