Employees Provident Fund withdrawal and interest rules clarified

The Employees Provident Fund (EPF) tax rules state that withdrawals are generally exempt from income tax after five years of continuous service, covering employee and employer contributions as well as accrued interest. Withdrawals before completing five years may be subject to TDS: no tax is deducted for amounts under ₹50,000, while amounts of ₹50,000 or more trigger TDS if a PAN is on file. Form 121 can be used to request no TDS at the time of withdrawal, but it does not make a taxable withdrawal tax‑free.

Interest on EPF balances continues after a job change. The account earns interest until the employee reaches age 58, or for three years after retirement if they retire at 55 or older. The account becomes inoperative at age 58 (or after three years of inactivity post‑retirement) and stops accruing interest. If an inactive account remains dormant for over seven years, its balance is transferred to the Senior Citizen Welfare Fund. Transfer of the PF account to a new employer is essential to maintain continuous service and compound benefits.