According to reports from Mint, EPF withdrawals become taxable if an account holder withdraws funds before completing 5 years of continuous service. The calculation includes the person's tenure with previous employers, making it crucial to calculate the 5-year period carefully. For withdrawals of less than ₹50,000, no tax deducted at source (TDS) is applicable. When changing jobs, transferring EPF balance remains tax-free if total continuous service across jobs is at least 5 years, with no TDS deduction.
As reported by Mint, if an Indian resident becomes an NRI, their EPF account remains active and continues to earn interest until withdrawal. NRIs cannot contribute to their EPF account if no longer employed with an EPF-covered Indian employer. If an NRI withdraws EPF balance before 5 years, TDS of 10% is applicable for those with valid PAN cards, with higher interest rates for those without PAN. However, if 5 years of continuous service is completed in India, the entire EPF withdrawal amount including employee and employer contributions plus interest is fully exempt from tax in India.
According to Mint, NRIs can still claim EPF funds even if they move abroad without withdrawing the balance. However, it's advisable to wait at least two months after leaving employment before applying for withdrawal to ensure EPFO records reflect updated employment status. The following forms must be filed for PF withdrawal: Form 19 for full and final settlement and Form 31 for partial withdrawal. EPF claims are settled within 20 days for offline claims and 3-5 working days for online claims with updated KYC process.
As reported by Mint, NRIs may need to check tax rules in their country of residence as the withdrawn amount could be taxable there depending on local laws. NRIs can use Double Taxation Avoidance Agreement (DTAA) to reduce tax burden if applicable. The article emphasizes that these rules depend on the EPF account holder's employment status, citizenship, and the country they move to, making careful planning essential for international tax implications.
