Changes in EPF rules on early withdrawal and applicable TDS

Are you planning to withdraw your EPF amount early? Do you want to know the applicable TDS when withdrawal made before 5 years of service? This article gives information about the recent amendments made by the Government of India in early EPF withdrawal and applicable TDS details.

Changes in EPF withdraw rules

Are you planning to withdraw your EPF amount early? Then you should know the recent amendments made on early withdrawal of PF amount by The Ministry of Labour and Employment in EPF scheme recently. The new changes are tightens the early withdrawal.

Retirement Age

Previously retirement age was considered as 55 years. But retirement age has been in increased to 58 years as per the new change.

Previously up to 90% of the EPF amount can be withdrawn once the member has reached 54 years of old or 1 year before the actual retirement. As per the new rule, 90% of the EPF balance can be withdrawal after the member reached 57 years.

Full EPF amount withdrawal

EPF amount has the below four parts:
EPF balance = Employee contribution + Employer contribution + interest earned by employee contribution amount + interest earned by employer contribution amount.
Employee contribution is 12% of basic pay and the same amount for employer contribution also.
Previously EPF members were allowed to withdraw the entire corpus after 60 days of unemployment.
As per the new rule, members can't withdraw the entire balance till his retirement age which means 58 years. But members are allowed to withdraw their own contribution amount and interest earned by it. Remaining amount which means employer contribution and interest earned by it can be withdrawn at 58 years only which means after retirement.
Withdrawal of 100% EPF amount is not possible before the retirement.

What will happen after early withdrawal

As per the previous rule, If the EPF member or an employee withdraws the entire amount the his /her membership will be terminated and not a member of EPF scheme.

As per new rule, member can't withdraw entire amount and can take only his / her contribution and employer's contribution is still in his / her account. So he / she continue o be member of EPF scheme.
If no contribution is made for 3 years then the PF account will become inactive, but existing amount will earn the interest.

TDS on EPF withdrawal

1. TDS is not applicable if withdrawal amount is less than Rs 50,000
2. TDS is not applicable if withdrawal amount is >= Rs 50,000 and withdrawal is made after 5 years of service
3. 10% TDS is applicable if withdrawal amount is >= Rs 50,000 and withdrawal is made before 5 years of service. This 10% is applicable only if the member submits the PAN, if not the applicable TDS is 34.6%.
4. TDS is not applicable if withdrawal amount is >= Rs 50,000 and withdrawal is made before 5 years and Form 15G or Form 15H submitted.

The above changes are effective from 1st May 2016 onwards. The claims received till 30th Apr'16 will be processed as per the existing rules.


All the above amendments might have a lot of impact on employees since early withdrawal of entire PF amount is not allowed and everyone can have a certain amount for retirement which gives financial security.

Related Articles

How to withdraw PF amount - Guideline for Provident Fund process

In this article, you will know what are the procedures to process PF form. How to withdraw PF amount, what are the procedure to follow up with ex-employer to withdraw or transfer PF amount and so on. Read this article to know to how to transfer PF amount or how to withdraw PF amount? Guideline for Provident Fund withdrawal or transfer or partial withdrawal. You can check PF balance amount online and get its detail here.

EPF - Undeserved subsidy or a forced investment?

In this article, the author has expressed a view that EPF is an investment which is forced upon the employees, and govt. must give an option to all employees to opt out of EPF because of it's complex nature and low service orientation of PF departments which make the employees run from pillar to post in case of transfers & withdrawls.

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Author: Ramachandran Pattabiraman20 Apr 2016 Member Level: Diamond   Points : 6

Besides keeping everything one side about the EPF we should understand one thing that the Scheme itself was introduced to make savings compulsory during employment for his future benefits. This is called as a social security measure. This can be realized only by experienced people/employees and the withdrawal should be avoided till the age of at least 50 years. Till that time he can transfer the accumulations from one employment to another as it is very easy nowadays. It is good and easy to withdraw the PF accumulations even after completing one year service but one should think for a while what is the savings of him for his future. One time PF commissioner of Tamilnadu and Pondicherry told in a meeting that while withdrawing the PF accumulations by saying they could opt for other savings measures with wise thinking but practically it could not be met by them and the employees should think for a while before withdrawing. There are facilities to draw money in the name of advance from the fund for (1) self/brother/sister/son/daughter marriage expenses (after membership of seven years service) and (2)buying land for house or buying house/flat or constructing house (after membership of five years service) without any interest or repayment. Without knowing such provisions of advances under the act and simplicity of transferring fund from one employment to another, many are opting to withdraw the money.

Author: Kailash Kumar20 Apr 2016 Member Level: Platinum   Points : 3

Labour Minister Bandaru Dattatreya has announced on 19.04.2016 at Hyderabad that the Government has cancelled the notification that tightened rules for the withdrawal of Employee's Provident Fund (EPF) accumulations till the age of 58. With the scrapping of the notification now EPFO subscribers who are out of job for more than two months can file for full and final settlement of provident fund, including the employers’ share of 3.67 per cent.

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