Here’s how you can avoid TDS deduction upon provident fund withdrawal

Provident Fund is a government-backed retirement scheme and is considered one of the retirement-focused investment options. The Employees’ Provident Fund Organisation (EPFO) allows employees to withdraw PF before retirement, too. However, if an employee withdraws before 5 years of opening the account, TDS (Tax Deduction at Source) may be levied.

According to the withdrawal rules, if the EPF/PF account is attached with PAN (Permanent Account Number) then the TDS deduction will be 10% and if not attached the deduction will rise as high as 20%. However, there are cases where one can avoid TDS deduction.

Speaking on how an EPFO subscriber can avoid TDS deduction, an official said, “If the PF withdrawal amount is less than Rs. 50,000, then there will be no TDS levied on one’s PF withdrawal.”

“However, in case the PF amount withdrawn is above ₹50,000 then the TDS becomes applicable if one’s annual income is more than Rs. 2.5 lakh,” LiveMint quoted the official as saying.

Meanwhile, another official, belonging to a consultant fund, said that one can avoid TDS deduction even when the withdrawal is more than Rs 50,000.

“If the PF account holder’s annual income is below Rs. 2.5 lakh, then, in that case, one can avoid TDS deduction by furnishing Form 15G or 15H,” LiveMint quoted him as saying.

He added that by submitting Form 15G or Form 15H, the PF account holder becomes eligible for TDS exemption.