The Employees' Provident Fund Organisation (EPFO) has issued comprehensive instructions explaining the applicability of Tax Deducted at Source (TDS) on Employees' Provident Fund (EPF) withdrawals. According to the official guidelines, from tax year 2026-27, a new Form 121 will be required to claim TDS exemption on EPF withdrawals, replacing the earlier Form 15G and Form 15H that were previously used. The new form aims to simplify and streamline the process for tax deduction and exemption on provident fund withdrawals under the updated Income Tax framework.
The EPFO instructions establish clear conditions for TDS on EPF withdrawals based on service duration. EPF withdrawals made after completion of five years of continuous service are not subject to TDS, subject to applicable provisions. However, where the period of continuous service is less than five years, TDS applicability is determined based on prescribed conditions including the nature and amount of withdrawal. The document emphasizes that PAN is required for processing EPF withdrawal claims, with TDS deducted at normal applicable rates when PAN is furnished, and at higher rates as per income tax provisions when PAN is not provided.
The guidelines provide options for subscribers to avoid TDS through specific forms. Form 15G and Form 15H may be submitted in eligible cases as per income tax rules to seek non-deduction of tax at source, where conditions are satisfied. These forms will no longer be valid for TDS exemption purposes from tax year 2026-27, with the new Form 121 replacing them under the updated Income Tax framework. The EPFO has outlined these instructions to provide clarity on the conditions under which TDS is applicable on EPF withdrawals.
Separately, the EPFO has been focusing on faster processing of claims, with around 71% of advance claims now being processed through automated mode within three days. According to recent official data, this reflects increased use of digital systems for claim settlement, demonstrating the organization's commitment to improving service delivery and reducing processing times for subscribers.
