The Employees’ Provident Fund (EPF) helps individuals build a retirement corpus by requiring them to set aside a portion of their salary. While EPF contributions are typically tax-exempt, withdrawals may attract Tax Deducted at Source (TDS) under Section 192A of the Income Tax Act if they do not meet certain conditions. This section governs the taxation and exemptions on EPF withdrawals, aiming to promote long-term savings and restrict premature withdrawals.
The Finance Act, of 2015, introduced Section 192A to regulate TDS on premature withdrawals from the Employees’ Provident Fund Scheme, 1952. According to Section 192A, TDS applies if employees fail to meet the qualifying conditions outlined under Rule 8, Part A of the Fourth Schedule of the Income Tax Act.
This provision requires deducting TDS at the time of payment and depositing it with the government within specified timelines. Taxpayers must typically deposit TDS within one week of the following month, except for March deductions, which they must deposit by April 30.
Entities responsible for deducting TDS on EPF withdrawals must file Form 26Q quarterly to report the TDS deductions. Here are the quarterly deadlines for TDS returns:
| Quarter | Payment Due Date |
| April to June | 31st July |
| July to September | 31st October |
| October to December | 31st January |
| January to March | 31st May |
The TDS rate on EPF withdrawals depends on whether the employee has provided their Permanent Account Number (PAN):
TDS under Section 192A applies only if the total EPF withdrawal exceeds Rs. 50,000. Withdrawals below this limit are exempt from TDS, ensuring smaller savings remain unaffected.
Several conditions exempt EPF withdrawals from TDS under Section 192A:
You may also want to know Section 194C – TDS on Payment to Contractor
Individuals below 60 years with income below the taxable limit use Form 15G, while senior citizens use Form 15H.
EPF account holders with less than 5 years of continuous service must submit their PAN to avoid TDS at the higher rate of 34.608%. However, employees with 5+ years of continuous service or those terminated due to reasons beyond their control, such as illness or business closure, are exempt from submitting PAN for EPF withdrawals.
The payer deducts TDS at the time of payment if the following conditions apply:
The standard TDS rate is 10% on EPF balances exceeding Rs. 30,000 for employees with PAN. However, exemptions apply based on the submission of Forms 15G or 15H, continuous service tenure, or other specified conditions.
You may also want to know Form 10F
Section 192A of the Income Tax Act mandates TDS on EPF withdrawals to encourage long-term saving among employees. Employers deduct TDS on premature withdrawals, but employees can save on taxes by meeting the minimum continuous service period or submitting the required forms.
By understanding Section 192A in detail, individuals can maximize the benefits from their EPF savings, plan withdrawals more strategically, and avoid unexpected tax deductions. Knowing the exemptions under this section can help employees make more informed decisions regarding EPF funds.
No, TDS applies only if the EPF withdrawal amount exceeds Rs. 50,000 and the employee has not completed 5 years of continuous service.
If PAN is not provided, TDS is deducted at a higher rate of 34.608%.
No, withdrawals after 5 years of continuous service are exempt from TDS.
Eligible employees can submit Form 15G or Form 15H, along with PAN, to avoid TDS on EPF withdrawals.
TDS is deposited within one week of the month following the deduction, except for deductions in March, which are deposited by April 30.
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