PF Withdrawal: Big change in the rules for withdrawing money from PF! EPFO declared this form invalid for TDS exemption

The Employees’ Provident Fund Organization (EPFO) has implemented a major and stringent amendment in the rules related to withdrawals and tax deduction (TDS) for crores of employed employees making advance or full withdrawals from the Provident Fund (PF) account. According to the official circular issued by EPFO, the scrutiny system of self-declaration forms to be submitted to get exemption from TDS during premature PF withdrawal has been completely tightened. EPFO has issued clear instructions that all claims made by non-senior account holders using wrong forms or not following the prescribed format to prevent TDS deduction will be treated as ‘invalid’ with immediate effect and TDS will be deducted directly on such claims as per rules. This decision of EPFO, just before the festive season, will have a direct impact on those subscribers who are filing online claims to withdraw the amount from their PF account due to house construction, illness, marriage or job loss.

There is a clear provision in the TDS rules of EPFO ​​under Section 192A of the Income Tax Act that if an employee withdraws an amount of ₹50,000 or more from his PF account without completing 5 years of continuous service, then the withdrawal amount is considered taxable. In such cases, EPFO ​​is required to deduct TDS on the total amount of withdrawal.

Till now many shareholders used to upload old, invalid, unsigned or inappropriate declaration forms on the online portal to avoid TDS deduction. EPFO has clarified that:

• For general employees below 60 years of age Form 15H Completely invalid, as this form is prescribed only for senior citizens (60 years of age or above).

• If a non-senior employee has uploaded Form 15H by mistake instead of Form 15G, the system will process that claim with direct TDS deduction without any exemption or the claim will be rejected.

• Additionally, Form 15G uploaded without correct seeding of PAN card or unclear/incomplete forms will also be rejected.

EPFO has directed all regional offices and field officers to ensure compliance with TDS rules in letter and spirit. The mathematics of TDS deduction on PF withdrawal applies as follows:

If an employee’s PAN card is not linked to the PF account or the exemption is canceled due to the form being declared invalid, then he may directly have to suffer a huge tax loss of about 35 percent.

It is important for claimants to understand the eligibility criteria of both the forms to avoid any confusion:

1. Form 15G: This form is for Indian citizens whose age is under 60 years Is. If their estimated total income in the current financial year falls within the scope of Nil Tax Liability, then they can fill and upload both the parts of Form 15G on the EPF portal.

2. Form 15H: This form specifically Senior citizens (60 years or more) is designed to. If the tax payable on the total taxable income of a retired employee is nil, then they are eligible to submit Form 15H. It is legally illegal for underage employees to use this form.

EPFO has advised subscribers to check their profile on the Unified Member Portal before submitting the claim:

• UAN-PAN Linking: Make sure that your correct PAN number is linked to the UAN and its online verification with the income tax database is completed.

• Bank Account and IFSC: The bank account in which the amount is being requested should be seeded with Aadhaar and digitally approved by the bank branch.

• Correct format of PDF: Upload only clear and signed copy of Form 15G on the portal in PDF format (maximum 1 MB size).