Is EPF withdrawal taxable before 5 years? Tax and TDS explained
If you withdraw your EPF before 5 years of continuous service, it is taxable. If the payout is ₹50,000 or more and your PAN is linked, 10% TDS is cut first. So a ₹2,40,000 balance pays you ₹2,16,000 after ₹24,000 of TDS. After 5 years, the whole amount is tax-free.
Why this is in the news
EPFO marked its 74th Foundation Day on 1 November 2026. It announced WhatsApp services and wider automatic settlement of claims, which it says can pay eligible withdrawals in as little as three days.
Faster money does not change the tax. The rules below decide how much of your withdrawal you actually keep.
The 5-year rule, in one minute
What counts is continuous service of 5 years, or 60 months. Service with earlier employers counts too, but only if you moved that PF balance into your current account.
Under 5 years, the withdrawal is taxable. At 5 years or more, it is tax-free and no TDS is cut.
There are three exceptions. No tax applies if your job ended for a reason outside your control, such as ill-health or the employer closing down. None applies when the balance is moved to a new employer's PF. And none applies to the part you transfer.
How much TDS is cut
TDS applies only when three things are true: service is under 5 years, the payout is ₹50,000 or more, and you have not filed Form 15G or 15H. With your PAN linked, the rate is 10% of the payout.
Without a linked PAN, TDS is cut at a much higher rate. Link your PAN to your UAN before you file the claim.
If your total income for the year is below the taxable limit, Form 15G (or 15H if you are 60 or older) asks EPFO not to cut TDS.
| Balance paid out | TDS under 5 years | Credited to you | TDS after 5 years |
|---|---|---|---|
| ₹40,000 | Nil | ₹40,000 | Nil |
| ₹50,000 | ₹5,000 | ₹45,000 | Nil |
| ₹1,00,000 | ₹10,000 | ₹90,000 | Nil |
| ₹2,40,000 | ₹24,000 | ₹2,16,000 | Nil |
| ₹5,00,000 | ₹50,000 | ₹4,50,000 | Nil |
Worked example: leaving after 3 years 8 months
Say you leave your job after 44 months and take out your full PF balance of ₹2,40,000 instead of moving it. Your PAN is linked.
Service is under 60 months and the payout is above ₹50,000, so TDS applies. EPFO cuts ₹24,000 and credits ₹2,16,000 to your bank account.
Had you moved the same ₹2,40,000 to your new employer's PF, nothing would be cut. Your 44 months would also keep counting towards the 5 years.
TDS is not the final tax
The 10% is only an advance. The real tax is worked out in your income-tax return, and the TDS is credited against it.
In the return, each part of the balance is taxed differently. The employer's share and the interest on it are added to salary. The interest on your own share is taxed as other income. Your own contributions are not taxed again, unless you claimed a deduction for them in the old regime.
Everything is taxed at your slab rate. In the new regime, if your total income stays within the rebate limit, the TDS can come back as a refund.
The pension part (EPS) is claimed separately and is not covered here. Rules are as of FY 2026-27; check your own case with a tax professional.
Questions people ask
Is TDS deducted on EPF withdrawal after 5 years?
No. After 5 years of continuous service, including earlier employers whose balance you transferred in, the withdrawal is tax-free and no TDS is cut.
How much TDS is cut on a ₹1 lakh EPF withdrawal?
If service is under 5 years and your PAN is linked, ₹10,000, which is 10%. You get ₹90,000. Without a linked PAN, a much higher rate applies.
Is there TDS on an EPF withdrawal below ₹50,000?
No. TDS is cut only when the payout is ₹50,000 or more. The amount can still be taxable in your return if service was under 5 years.
Does moving PF to a new employer count as a withdrawal?
No. A transfer is not taxed, and your earlier service keeps counting towards the 5 years.
Can I get the EPF TDS back?
Yes, if the tax worked out in your return is lower than the TDS. The excess comes back as a refund after you file.
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Try it nowLast updated 2 November 2026. Figures reflect FY 2026-27 and are educational estimates, not advice. Muktify is not SEBI-registered and never recommends or ranks any instrument. How we write and check guides.