EPFO Tax : How much tax do you have to pay when withdrawing PF? Know the complete information
The Employees' Provident Fund Organisation (EPFO) runs a retirement savings scheme for employees. Employees can withdraw funds not only at the time of retirement but also during unemployment, for medical needs, marriage, house construction, and other emergency situations, either fully or partially. However, there are certain rules for withdrawing money from this scheme. Withdrawal from the PF fund is taxable. But do you know how much and when tax is applicable on PF withdrawals?
What are the rules for withdrawing PF?
After retirement, the entire amount in the EPF account can be withdrawn. EPF has fixed the retirement age at 55 years.
An employee can withdraw 90 percent of the amount from this account one year before retirement.
If an employee is unemployed for one month, they can withdraw 75 percent of the amount from the account. The remaining amount is transferred to the person's PF account after getting a new job.
If unemployed for two months, a person can withdraw the entire amount from the EPF.
If Aadhaar is linked to the UAN and the company has approved it, online approval is granted and the employee can withdraw their EPF amount at any time.
TDS is deducted after withdrawing PF
If you have withdrawn some money from the Provident Fund and noticed that an extra amount has been deducted, it is due to TDS deduction. When you withdraw money from the PF before completing 5 years of continuous service, a portion of it is deducted as TDS.
Is withdrawing up to ₹50,000 from PF tax-free?
If you withdraw money from EPF before completing 5 consecutive years of service, that amount is subject to tax. However, if you withdraw less than ₹50,000, no TDS is deducted on it. Even if you have worked in two jobs during this period, the total must add up to 5 years. If you moved from one company to another and completed five years of service, transferring the entire amount, then no TDS is deducted in such a case. But if you have served for less than five years, you will not get an exemption under this rule. You can check how much TDS has been deducted in Form 26AS and claim it while filing your income tax return. This amount can be refunded to you.