TAX ON WITHDRAWAL OF PF
This query is : Resolved
27 May 2009
CAN U TELL HOW TDS HAS TO BE CALCULATED ON WITHDRAWAL OF PF IN CASE WHERE EMPLOYEE HAS NOT COMPLETED 5 YRS OF SERVICE
SUBRAMANYA H
(Expert)
28 May 2009
there is no tds on withdrawal of pf
28 May 2009
there is tax please refer rules 8 and 9 of fourth schedule to ITACt
26 July 2025
Here’s the correct info on **TDS on PF withdrawal** when the employee has **not completed 5 years of continuous service**:
---
### Tax on PF withdrawal before 5 years service:
* **If PF is withdrawn before completing 5 years of continuous service, the amount withdrawn is taxable as income in that year.**
* The employer or the PF office **is required to deduct TDS @ 10%** on the amount withdrawn if the PAN of the employee is available.
* If PAN is not provided, TDS rate is higher, usually **20%**.
* If the PF amount is less than Rs. 50,000 and the employee has submitted Form 15G/H (if eligible), then no TDS is deducted.
---
### Relevant rules:
* Rule 8 and 9 of the Fourth Schedule of Income Tax Act provide the detailed provisions.
* The PF withdrawal amount is included under **"Income from other sources"** for tax purposes if service is less than 5 years.
* However, if the withdrawal is on account of specific reasons like retirement, or continuous service exceeding 5 years, then withdrawal is exempt.
---
### Summary:
| Condition | TDS Applicability | TDS Rate |
| ----------------------------------- | ----------------- | ----------------- |
| Service 5 years (or exempt cases) | No | No TDS |
| Amount < Rs. 50,000 with 15G/H | No | No TDS |
---
---
### Tax on PF withdrawal before 5 years service:
* **If PF is withdrawn before completing 5 years of continuous service, the amount withdrawn is taxable as income in that year.**
* The employer or the PF office **is required to deduct TDS @ 10%** on the amount withdrawn if the PAN of the employee is available.
* If PAN is not provided, TDS rate is higher, usually **20%**.
* If the PF amount is less than Rs. 50,000 and the employee has submitted Form 15G/H (if eligible), then no TDS is deducted.
---
### Relevant rules:
* Rule 8 and 9 of the Fourth Schedule of Income Tax Act provide the detailed provisions.
* The PF withdrawal amount is included under **"Income from other sources"** for tax purposes if service is less than 5 years.
* However, if the withdrawal is on account of specific reasons like retirement, or continuous service exceeding 5 years, then withdrawal is exempt.
---
### Summary:
| Condition | TDS Applicability | TDS Rate |
| ----------------------------------- | ----------------- | ----------------- |
| Service 5 years (or exempt cases) | No | No TDS |
| Amount < Rs. 50,000 with 15G/H | No | No TDS |
---
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