The Employees' Provident Fund Organisation (EPFO) has introduced comprehensive reforms to simplify provident fund withdrawal processes. According to reports from NDTV Profit, EPFO has reduced 13 withdrawal categories to three broad groups: Essential Needs, Housing and Special Circumstances. These reforms are designed to make partial withdrawals faster and easier for members, offering greater flexibility during emergencies. The organisation allows partial withdrawal in cases such as job loss, home purchase, or education expenses, ensuring employees can access their savings when needed.
Despite the reforms, tax rules remain unchanged for PF withdrawals. As reported by NDTV Profit, PF withdrawals are tax-free if the account has completed five years of continuous service. However, withdrawals made before five years may attract tax, and TDS is applicable in some cases if the amount exceeds ₹50,000. The tax department explains that Form 121 (formerly Forms 15G/15H) acts as a preventive compliance tool, ensuring that taxpayers whose tax liability is nil are not subjected to unnecessary TDS.
According to the tax department guidelines reported by NDTV Profit, there are specific scenarios where TDS is not applicable. If the withdrawal is under ₹50,000, no TDS is applicable. Additionally, no TDS is applicable on PF withdrawals made within five years of service if the amount is transferred to another PF account. The tax department also confirms that TDS is not deducted if the withdrawal is due to termination of service because of ill health, closure of the establishment or any reason beyond the employee's control.
For withdrawals of ₹50,000 or more within five years of service, employees can use Form 121 (formerly Forms 15G/15H) to avoid TDS. As reported by NDTV Profit, without submitting these forms, the withdrawal will attract 10% TDS even with PAN submitted. The tax department emphasizes that if the employee wants to withdraw ₹50,000 or more within five years of service without a PAN card, 34.60% TDS is applicable. These forms were previously self-declaration forms to avoid TDS on interest income before being replaced by Form 121 under the newly introduced Income Tax Act of 2025.
