How to Avoid TDS-Exemption in PF Withdrawal

July 18, 2021 By Damodhar C Off

 Provident Fund (PF) account is the investment made by the employees in their post-retirement life. It is managed by the Employees’ Provident Fund Organization (EPFO). EPFO allows advance withdrawal, though only for retirement. However, TDS (tax at source) is deductible, depending on when and how much is being withdrawn. TDS should not be deductible which means there are certain procedures to be followed for withdrawal, let us now see what they are.

Withdraw within five years.

If an EPFO ​​member wants to withdraw EPF or PF amount within five years of account opening. TDS will be levied on this amount. As per PF withdrawal rules, 10% TDS will be deducted if EPF/PF account is linked with PAN. This doubles when not connected to the pan. That is, 20 percent TDS is levied on the total PF. Employees with continuous service of more than five years are entitled to a tax deduction on the PF balance.

Non-payment of TDS can be taken into account even if PF is withdrawn within five years of account opening.

How is it?

If the withdrawal amount is less than Rs 50,000, TDS will not be applicable on the PF amount withdrawn within five years of account opening. With an annual income of more than Rs 2.5 lakh, the total PF to be withdrawn is Rs. TDS is levied if it is more than 50 thousand.

TDS can be avoided even if the PF withdrawal amount is more than Rs 50,000.

What else can be done for this?

If the annual income of the PF subscriber is less than Rs 2.5 lakh, then the amount of PF can be withdrawn more than Rs 50,000. However, to avoid TDS, Form 15G or 15H has to be submitted.

Who gives form?

  • Those below 60 years of age have to fill Form 15G and senior citizens have to fill the Form 15H.
  • By following these steps, one can be careful not to deduct TDS withdrawn from PF before retirement.