India EPF withdrawal and interest rules

In July 2026, the Employees Provident Fund (EPF) rules were clarified: withdrawals after five years of continuous service are tax‑exempt, while earlier withdrawals trigger TDS only on amounts of ₹50,000 or more if a PAN is on file. Form 121 can be used to request no TDS at withdrawal, though it does not make the withdrawal tax‑free. EPF balances keep earning interest after a job change until the member turns 58, or for three years after retirement at age 55 or older. The account becomes inoperative at 58 (or after three years of inactivity post‑retirement) and stops accruing interest; dormant accounts over seven years are transferred to the Senior Citizen Welfare Fund, and transferring the PF account to a new employer preserves continuous service and compound benefits.

By early August 2026, additional provisions were detailed. Members reaching 58 can withdraw the entire balance in a lump sum, with interest continuing only until age 61 before the account becomes inoperative. For workers taking a 1‑2‑year career break, the account stays open and interest accrues under the same age limits. The EPF interest rate for FY 2025‑26 was set at 8.25% per annum. New rules allow employees who resign or are laid off to withdraw up to 75% of their balance immediately, with the remaining 25% available after 12 months of continuous unemployment. Early withdrawals before five years of service may be taxable, while withdrawals for retirement, resignation, disability, or employer closure remain tax‑free. Claims are typically processed within 7‑10 days, with penalties for delayed settlements.