EPF withdrawals before five years of continuous service may attract TDS if the amount exceeds Rs 50,000. However, eligible taxpayers with nil tax liability can avoid deduction by submitting Form 121 before filing the withdrawal claim. Under the Income Tax Act, resident individuals whose estimated taxable income remains below the applicable exemption limit can submit Form 121 to prevent TDS deduction on eligible income, including EPF withdrawals. Earlier, taxpayers used Form 15G and Form 15H separately depending on age. These forms have now been merged into a unified Form 121, though the eligibility conditions broadly remain unchanged.

EPF withdrawal TDS rules explained

TDS is generally deducted on EPF withdrawals if:

• The employee withdraws EPF before completing five years of continuous service
• The withdrawal amount exceeds Rs 50,000
• Required declarations are not submitted
• PAN is not linked or furnished correctly

If PAN details are available, TDS is usually deducted at 10 per cent. Without PAN, the deduction may rise to 20 per cent, according to income tax rules.

However, no TDS is deducted if the EPF withdrawal is made after completing five continuous years of service.

Who can submit Form 121 for EPF withdrawal

According to EPFO rules, Form 121 can be submitted by:

• Resident individuals below 60 years
• Senior citizens aged 60 years and above
• Hindu Undivided Families (HUFs)
• Other specified eligible entities

Non-residents, companies and partnership firms are not eligible to submit this form.

The form can be used only when the declarant’s estimated total taxable income for the financial year is below the applicable exemption threshold and final tax liability is expected to be nil.

Form 121 income limits under old, new tax regime

Old tax regime

• Rs 2.5 lakh basic exemption limit for individuals below 60 years
• Rs 3 lakh for senior citizens
• Rs 5 lakh for super senior citizens

New tax regime

• Rs 4 lakh basic exemption limit for individuals

Only taxpayers whose estimated taxable income stays within these limits and whose final tax liability is nil can use Form 121 to avoid TDS deduction.

Documents required to avoid TDS on EPF withdrawal

EPFO states that the following documents and details are required while filing Form 121:

• PAN of the declarant
• TAN of the payer
• Proof of age
• Income details for which TDS exemption is claimed
• Bank account details linked with the withdrawal

PAN is mandatory. Incorrect or missing PAN details may result in higher TDS deduction.

Form 15G, Form 15H replaced by Form 121

Before the introduction of Form 121:

• Form 15G was used by resident individuals below 60 years and HUFs with nil tax liability
• Form 15H was meant for senior citizens aged 60 years or above with no tax payable after deductions

Both forms were commonly used to prevent unnecessary TDS deductions on EPF withdrawals, bank interest and other eligible income sources.

Though the forms are now unified, the underlying eligibility rules remain largely similar.

When to submit Form 121 to EPFO

The declaration must be submitted before the income is credited or paid. In the case of EPF withdrawals, eligible members should furnish the form before filing or processing the withdrawal claim.

Submitting the declaration late may result in automatic TDS deduction by EPFO.