The provisions relating to TDS on premature withdrawal of accumulated balance from the Employees’ Provident Fund (EPF) have been restructured under the Income-tax Act, 2025. The earlier Section 192A of the Income-tax Act, 1961 is now covered under Section 392(7), effective from 1st April, 2026.
This restructuring retains the provisions relating to deduction of tax at source on EPF withdrawals in specified cases, while aligning the section reference within the updated legislative framework.
Quick Reference – Section Mapping & Reporting
- New Section (IT Act 2025): Section 392(7)
- Nature of Payment: Payment of accumulated balance due to an employee
- Earlier Section (IT Act 1961): Section 192A
- Return Form: 26Q
- Code (for return filing): 1004
1. Applicability & Threshold
TDS is applicable when an employee withdraws their EPF balance before completing 5 years of continuous service.
No TDS is deducted if the withdrawal amount is ₹50,000 or less.
2. Rate of TDS
- 10% where PAN is furnished
- 20% or maximum marginal rate where PAN is not furnished
3. Components on which TDS shall be deducted
| Component of Lump Sum Payment | Taxability (if service < 5 years) | Subject to TDS |
|---|---|---|
| Employer’s Contribution | Taxable under head “Salary” | Yes |
| Interest on Employer’s Contribution | Taxable under head “Salary” | Yes |
| Employee’s Contribution | Not Taxable | No |
| Interest on Employee’s Contribution | Taxable under head “Other Sources” | Yes |
4. Exceptions
- If the total EPF balance withdrawal is less than ₹50,000
- When the employee submits Form 15G/15H, declaring that their total income is below the taxable limit
- When the withdrawal is due to reasons such as retirement, health issues, or permanent disability, as per specified conditions
- In case of a job change, where PF amount is transferred from one account to another