Employees’ Provident Fund (EPF) is a retirement scheme. This helps financially in future. Generally, money is withdrawn from this scheme after retirement. However, money can be withdrawn even earlier if needed. There are different rules for this.
TDS on withdrawal before five years
If an employee withdraws money from EPF before the completion of five years, then TDS is levied on it. No TDS will be levied on withdrawal of money after completion of five years.
However, TDS is not applicable for withdrawals before five years in certain circumstances. This includes the employee becoming ill or the closure of the business. In such case the employer cannot deduct TDS.
New rule will be applicable from April
Interest earned on contribution of more than 2.5 lakhs per annum in the EPF scheme will be taxed. This new rule will come into effect from April 1, 2022. It was announced in the budget of 2021, but due to lack of clarity, this rule is being implemented from 2022.
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