Employee Provident Fund (EPF), a retirement-oriented investment and is subject to Tax Deducted at Source (TDS) if an employee withdraws funds from the relevant EPF before five years have passed since the account was formed.
There is a retirement fund called the Employees' Provident Fund (EPF) for salaried workers. The employee contributes 12% of their monthly base pay to their EPF account, 12% of the employee's pay will also be contributed by the employer to the EPF. Under Section 80C, individuals gain from contributions to EPF accounts through a deduction. Cognizing how an EPF withdrawal might impact income tax or TDS would be beneficial.
Tax on withdrawing EPF:
Your EPF payout consists of three parts:
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Contributions from the employee and employer
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Interest in the employee and employer contributions
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Contributions from employers and interest in contributions from employers
Tax on EPF withdrawal:
If you leave the EPF before 5 years of nonstop service, TDS will be taken out. Although, when the sum is less than Rs. 50,000, no TDS would be taken into account.
Rates of TDS after 5 years:
TDS is applied at a rate of 10% if an EPF balance is withdrawn before five years of work and the amount is more than Rs. 50,000. Never fail to mention your PAN while withdrawing money. If PAN is not provided, TDS will be withheld at the highest slab rate of 30%.
You may file Form 15G/Form 15H if the tax on your entire income, including the EPF withdrawal, is zero. TDS is not withheld if Form 15G or Form 15H is submitted.
