Section 192A of the Income Tax Act, 1961, mandates Tax Deducted at Source (TDS) on premature withdrawals from the Employees’ Provident Fund (EPF) if certain conditions are not met. Introduced by the Finance Act, 2015, this provision ensures tax compliance while allowing exemptions for specific cases.
1. When is TDS Deducted Under Section 192A?
TDS applies if:
✅ Withdrawal before 5 years of continuous service (from the start of employment, including past employers if transferred).
✅ Amount withdrawn exceeds ₹50,000 (if below this threshold, no TDS applies).
Exemptions (No TDS):
- Withdrawal after 5+ years of service.
- Transfer of PF balance to a new employer (no actual withdrawal).
- Termination due to illness, business closure, or project completion.
- Submission of Form 15G/15H(if total income is below taxable limits).
2. TDS Rates Under Section 192A
| SCENARIO | TDS RATE |
| PAN provided | 10% |
| PAN not provided | 34.608% (maximum marginal rate) |
| Form 15G/15H submitted | 0% (if eligible) |
3. Key Compliance Rules
- Deductor: Employer or EPFO trustee deducts TDS at the time of payment.
- Deposit Deadline:
- Within 7 days of the next month(e.g., July TDS by August 7).
- For March withdrawals, due by April 30.
- TDS Return: Filed quarterly via Form 26Q.
- TDS Certificate: Issued in Form 16A(available in Form 26AS).
4. How to Avoid TDS?
✔ Complete 5 years of service before withdrawing.
✔ Transfer PF when changing jobs (instead of withdrawing).
✔ Submit PAN + Form 15G/15H (if income is tax-exempt).
5. Taxability of EPF Components
| COMPONENT | TAXABILITY |
| Employee’s contribution | Tax-free (if claimed under Section 80C) |
| Employer’s contribution | Taxable if withdrawn before 5 years |
| Interest on EPF | Taxable if withdrawn prematurely |
6. Penalties & Refunds
- Late TDS Deposit: Interest @ 5% per month.
- TDS Refund: Claim via ITR filingif income is below taxable limits
