Provident Fund is a corpus that is accumulated during the working years towards retirement. It comes under the ‘EEE’ or ‘exempt exempt exempt’ investment category. This means an investor can avail tax exemption on such investments, for both the investment, interest earnings and the maturity amount. However, this exemption is applicable only if a PF account holder remains invested in it for a minimum of five years.
In case of PF withdrawal before completion of five years of the PF account, the amount is subject to income tax and TDS deduction.
What is Form 15G?
Form 15G is a form that is submitted to banks/other financial institutions when you don’t fall under the taxable category of income. As per tax saving tips from investment experts, individuals whose annual income falls within the non-taxable limit of Rs. 2.5 lakhs can save TDS deduction on PF withdrawal by furnishing form 15g/15h.
Form 15G for PF withdrawals
Apart from using Form 15G for FDs, it can now also be used for PF. EPFO Unified portal launched this facility, allowing all EPF members to withdraw PF online while avoiding TDS.
How to submit Form 15G for EPF withdrawal?
PF account holders can submit Form 15G along with their PF withdrawal forms to ensure non-deduction of TDS upon withdrawal.
- If opting for physical submission, one can fill the form and submit a physical copy to the EPFO regional office.
- Apart from the online acceptance of Form 15G for PF withdrawal, the EPFO also accepts offline form submission.
Here are the steps to be followed for submitting Form 15G online using the EPFO portal:
- Users must login to EPFO UAN unified portal through their username and password along with the captcha code provided.
- Visit the online services section.
- Go to ‘Claim (Form-31, 19, 10C & 10D)’ available in the drop-down menu.
- After filling in all the required details, one must verify the last 4 digits of their phone number for the EPF withdrawal form to be visible.
- Download the Form 15G through this section.
- User must fill Part 1 of the Form 15G and verify all the details.
- Convert the filled form into PDF.
- Upload the PDF format of the form to complete the process.
How to Fill Form 15G for PF Withdrawal?
Here are the detailed steps that one must follow while filling out Form 15G:
There are two main sections in the form, the first section is meant for individuals who want no TDS on certain income segments. Listed below are the sections of the form that have to be filled:
- Field 1 – Name of the Assessee (Declarant)
- Enter name as per PAN card
- Field 2 – PAN of the Assessee
- A valid PAN card in the assessee’s name is essential to be eligible to file Form 15G.
- In absence of a valid PAN, an assesse’s declaration is considered invalid.
- Only an individual assessee can claim Declaration in Form 15G and it is not permitted for firms or companies.
- Field 3 – Status
- An individual’s income tax status should be an individual or Hindu Undivided Family(HUF).
- Field 4 – Previous Year
- The financial year for which one is claiming the non-deduction of TDS must be the previous year.
- Field 5 – Residential Status:
- Residential status should be a resident individual.
- NRIs cannot submit Form 15G.
- Fields 6-12 – Address:
- Enter the communication address along with the PIN code of the address.
- Fields 13-14 – Email id and contact details:
- Enter a valid email ID and contact number for future communications.
- Field 15 (a) – Assessed to tax under the Income-tax Act, 1961:
- Select ‘’Yes’’ if tax assessed in any of the previous financial years as per provisions of Income Tax Act, 1961.
- If selecting ‘yes’, state the latest assessment year for income tax returns.
- Field 16 – State the estimated income for which this declaration is made
- Field 17 – State the estimated total income of the previous financial year
- Field 18 – Details of Form 15G filed during the previous year, if any:
- Those who have filed Form 15G anytime during the financial year should state the details of the same along with the aggregate income amount
- Field 19 – Income details for which the declaration is filed:
- Here, one must fill in the investment details for which declaration is being filed. It is important to mention the investment account number (term deposit reference/ life insurance policy number/ employee code, etc.)
Before submitting, make sure to re-check all the information to avoid any error.
What are the TDS rules on EPF withdrawal?
Here, we will try to explain the rules around TDS on EPF withdrawal.
- As per section 192A of the Finance Act, 2015, any withdrawal from PF account that is made before completion of 5 years of account opening is subject to TDS (Tax Deducted at Source) if the amount exceeds Rs. 50,000.
- The TDS limit was earlier applicable on a minimum withdrawal amount of Rs. 30,000. However, in the Budget of 2016, the limit was extended to Rs.50,000.
- While a PF account holder can make use of Form 15H to claim TDS exemption, Form 15G is specifically for individuals who are under 60 years of age, while Form 15H is applicable for individuals over 60 years of age.
When is TDS applicable to PF withdrawal?
TDS on PF withdrawal is applicable if an eligible employee wants to withdraw an EPF amount more than or equal to Rs. 50,000 within 5 years of service.
How is TDS applied to PF withdrawal?
- 10% TDS is applicable if an employee submits PAN card at withdrawal but does not submit form 15G or 15H while making PF withdrawal.
- 34.608% TDS is applicable if an employee does not submit the PAN card or Form 15G or 15H while making PF withdrawal.
When is TDS not applicable to PF withdrawal?
Mentioned below are the scenarios in which TDS is not deducted on PF withdrawal:
- No TDS on PF withdrawal is applicable in case an account holder transfers an existing PF account to another account.
- In case an employee’s service is terminated due to ill-health or business discontinuation by the employer, project completion or any other cause that is beyond the employee’s control.
- When an employee withdraws the EPF amount post completion of 5 years of service (including service time with a former employer).
- If the PF amount is under Rs. 50,000, but the employee has not completed 5 years of service.
- If an employee withdraws at least Rs. 50,000 from the PF account while his/her employment is of fewer than 5 years and he/she furnishes Form 15G/15H along with PAN card.
Form 15G helps PF account holders to avoid TDS, if applicable. It is important for claimants to note that any false declaration of Form 15G may result in a fine and also imprisonment as per Section 277 of the Income Tax Act, 1961. Therefore, one must ensure to mention correct details while filling the form for tax saving purposes.
You must submit Form 15G at the bank branch from which you receive the interest income. You don’t need to submit the form at the Income tax department as it is required to be submitted with the income tax or TDS deductor
Since Employees’ Provident Fund (EPF) is a mandatory deduction from the salaries of employees employed with eligible organisations, there is no alternative to the same. Both employee and employer have to contribute towards the employee’s PF account.
The interest rate applicable to EPF contributions is 8.5%.
Both Public provident fund and Employee provident fund are government schemes that are designed to act as tax-saving options. Both are covered under Section 80C of the Income Tax Act, 1961. While EPF is mandatory for eligible employees, PPF is a voluntary scheme that can be opted based on individual investment preferences.
If an employee wants to modify his/her contribution in EPF to a higher amount than the minimum requirement, then he/she can do so. However, the excess contribution comes under ‘Voluntary Provident Fund’ and the employer’s contribution remains unchanged.