EPF withdrawal: No TDS after five years of service? Know tax rules, forms and claim process to avoid surprises

A secure, long term investment tool, the Employees' Provident Fund (EPF) allows members to withdraw full or partial funds under specific conditions. While partial withdrawal is permitted even before retirement, final settlement is approved only after you leave employment.

Online claims with full KYC take 3–7 working days. Approval can take 7-15 working days and auto-mode eligible claims take 72 hours. And offline physical claims submitted to EPFO office can take up to 20 working days. You will receive SMS alerts at every stage (claim submitted, approved, disbursed).

Partial withdrawals are allowed for certain reasons as long as minimum balance is maintained. The reasons include i.e. medical treatment, education, marriage, housing, special circumstances and exit from employment.

EPF withdrawal: Crucial TDS tax thresholds

EPF withdrawal is tax-free if you have completed five years of continuous service. If withdrawn before five years, the amount is added to your income and taxed at your slab rate. TDS of 10% is deducted if withdrawal exceeds ₹50,000 and PAN is linked.

Here's a quick rundown of the rules to help prevent any surprise deductions on your payout:

• Service period more than five years: Absolute tax exemption. No tax deducted at source (TDS) or income tax is applicable, regardless of the withdrawal amount.
• Service period less than five years and payout less than ₹50,000: Tax-free. No TDS is deducted.
• Service period less than five years and payout more than ₹50,000 (PAN linked): Subject to 10% TDS unless you submit Form 15G. Senior citizens must submit the Form 15H for senior citizens for same benefit.
• Service Period less than five years and payout more than ₹50,000 (PAN not linked): Attracts a maximum marginal tax rate of 34.6% TDS deduction.

How can I submit Form 15G to save taxes?

When applying for online withdrawal (Form 19) on the Member Portal, the system provides a file upload window for Form 15G/15H. You can download the form from the Income-Tax e-filing website, fill out Parts I & II, convert it to a PDF, and upload it during the claim filing process.

Notably, from AY27, Form 121 is the new, unified income tax form that replaces the erstwhile Form 15G and Form 15H. It can be used by individuals and Hindu Undivided Families (HUFs) to prevent deduction of TDS on dividends, interest and other income when earnings are below the taxable amount. While the previous two forms (Form 15G/15H) were separated based on age, the unified Form 121 is one-and-done for all taxpayers across ages.

What are the EPF withdrawal claim forms?

As per the mandate, EPF subscribers must maintain 25% minimum balance in their EPF account at all times, which means you can access a maximum of 75% of your corpus during partial withdrawal. For example, a subscriber with ₹2 lakh total balance (employee and employer contributions), is eligible to withdraw up to ₹1,50,000 as partial withdrawal while keeping ₹50,000 as minimum balance in the EPF account.

If you are applying for a full withdrawal after quitting a job, verify that your employer has updated your exit credentials. You can check this by visiting the EPFO website and clicking on View > Service History. The date of exit must be entered at least two months prior to the date you are filing the claim.

You can withdraw PF partially while employed via Form 31 (Advance) for specific purposes. However, full withdrawal (Form 19) is only allowed after leaving service — resignation and after completing two months of unemployment.

• Form 19 for final PF settlement: Used to withdraw your absolute EPF balance (inclusive of employee share, employer share, and interest earned). A member is eligible only if you have retired or resigned from your job and have been continuously unemployed for at least two months i.e. 60 days.
• Form 10C for pension withdrawal benefit: Allows you to withdraw the matching pension accumulation (EPS). You can claim a lump sum under Form 10C only if your total continuous service is less than 10 years. Beyond 10 years, you must secure a Scheme Certificate and await monthly pension payouts at age 58.
• Form 31 for partial PF advance: Enables EPF members to claim non-refundable advances while actively employed. Reasons include medical emergencies, daughter's or self-marriage, home loan repayments, or severe natural calamities.