KEY CASES WHERE TDS IS NOT APPLICABLE ON EPF WITHDRAWALS
While typically, TDS (Tax Deducted at Source) is applicable on EPF withdrawals, there are certain specific cases where TDS is not required. Tax-free withdrawals are permitted, provided certain regulatory conditions are met.
Cases when TDS is Not Applicable:
- Full and Final Settlement:
- Retirement: When an individual retires and withdraws their entire EPF balance.
- Termination: If the employee’s employment is terminated due to reasons beyond their control, such as retrenchment or closure of the establishment.
- Death of the Employee:
- If the employee dies, TDS is not applicable on the EPF withdrawal by their nominee or legal heir.
- Medical Treatment:
- If the EPF withdrawal is specifically used for medical treatment of the employee or their dependent family members. Supporting medical documents are usually required to claim this exemption.
- Purchase of a House Property:
- If the EPF withdrawal is utilized to purchase a residential property. The amount withdrawn should be used within six months of withdrawal.
- Repayment of Home Loan:
- If the EPF withdrawal is used to repay a home loan. Similar to the house property purchase, the amount should be used within six months of withdrawal.
- Education of a Child:
- If the EPF withdrawal is used for the education of a child. Supporting educational documents may be required. Up to 50 per cent of their total EPF contributions to cover higher education expenses for themselves or their children after class 10. However, this withdrawal is permitted only after a minimum of 7 years of contributions to the EPF account.
- PF withdrawal amounts less than Rs 30,000, even with less than five years of service.
- Withdrawal amounts equal to or greater than Rs 30,000 with less than five years of service, if the member submits Form 15G/15H along with their PAN.
- Marriage: Declaration submitted with Claim Form 31.
THE TDS RATES DEPEND ON THE SUBMISSION OF PAN AND FORM 15G/15H
With PAN submission:
- If Form 15G/15H is submitted, no TDS is applicable.
- Without Form 15G/15H, TDS is deducted at 10 per cent.
Without PAN submission:
- TDS is deducted at the maximum marginal rate of 34.606 per cent.
Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.
