The Employees’ Provident Fund (EPF) is one of the most trusted savings schemes for employees in India. But many employees face unexpected deductions, delays, or complications—mainly because of incomplete KYC, outdated details, or misunderstanding of EPFO rules.
Here is a clear and updated guide to help every employee protect their EPF savings.
1. Why Updating Your PAN in EPF Is Critical
Many members do not update their PAN on the EPFO portal—and the result is shocking during withdrawal.
If PAN is NOT updated:
- TDS of 34.608% (approx. 34.6%) will be deducted from your withdrawal amount.
- This heavy tax applies when:
✔ Your EPF service is less than 5 years, and
✔ Your withdrawal amount exceeds ₹50,000.
If PAN is updated and valid:
- TDS is only 10%, according to the Income Tax Act.
This is why keeping your PAN + Aadhaar + Bank Account KYC fully approved on the portal is extremely important.
2. Understanding TDS on EPF Withdrawals
Here is a simple view of EPF tax rules:
If you have completed 5 years of continuous service:
- NO TDS
- Entire EPF amount is tax-free
If your service is less than 5 years:
- TDS applies unless you submit Form 15G/15H (conditions apply).
TDS Rates:
| Condition | TDS Rate |
|---|---|
| PAN updated | 10% |
| PAN not updated | 34.6% |
| Form 15G/15H valid | 0% (no TDS) |
| NRI employees | 30% + surcharge |
3. What Are Form 15G and Form 15H?
These forms help avoid TDS if your total income is below the taxable limit.
Form 15G
- For individuals below 60 years.
- Can be submitted only if:
✔ Total annual income is below the tax exemption limit
✔ Tax liability is zero
Form 15H
- For individuals above 60 years (senior citizens)
- Conditions are more relaxed than Form 15G.
These need to be submitted online during EPF withdrawal if applicable.
4. EPF Withdrawals: Difference Between Para 19 and Para 31
EPFO allows different types of withdrawals. The two most common are:
Para 19 – Final Settlement (Full and Final Withdrawal)
Used when:
- You leave a job
- You are unemployed for 2 months or more
- You retire
What you get:
✔ Employee Contribution
✔ Employer Contribution
✔ Pension Contribution (EPS) – only the withdrawable portion if service <10 years.
Para 31 – Partial / Advance Withdrawal
This is not a full withdrawal; it is an advance for specific needs.
Common reasons allowed under Para 31:
- Medical emergencies
- Marriage or education of self/family
- Purchase or construction of a house
- Home loan repayment
- Repairs/renovation
- Natural calamities
- Lockout/closure of company
No need to quit the job for a Para 31 withdrawal.
5. EPF Contribution Rates (Basic Pay)
- Employee contributes 12%
- Employer contributes 12% but split into:
✔ 3.67% to EPF
✔ 8.33% to EPS
Administrative charges may apply but the employer pays them.
6. Pension Withdrawal vs Transfer (EPS Rules)
If total service is less than 10 years:
- You can withdraw EPS (Form 10C)
If service is 10 years or more:
- EPS cannot be withdrawn
- It must be carried forward until you claim pension.
7. EPF Interest and Balance Updates
- Interest is credited annually (usually in March/April for the previous FY).
- Even if not credited visibly, it is calculated internally.
- You can check balance via:
✔ UMANG App
✔ EPFO Portal
✔ SMS & Missed Call service
8. Common Mistakes Employees Should Avoid
✔ Not updating PAN → heavy tax deduction
✔ Wrong bank account → claim rejection
✔ Mismatch in name on Aadhaar/PAN/EPFO → delays
✔ Mobile number not linked to Aadhaar → OTP issues
✔ Not linking UAN with Aadhaar → claim not processed
✔ Joining multiple jobs without transferring EPF → accounts get scattered
9. How to Ensure Smooth EPF Withdrawals
- Complete KYC (PAN + Aadhaar + Bank)
- Ensure name, DOB, and father’s name match exactly
- Update your latest bank account (with IFSC)
- Check service history is correct in UAN
- Keep your mobile number linked to Aadhaar active
- Don’t delay in transferring old PF accounts
10. Important: Tax-Free EPF Conditions
Your EPF is fully tax-free if:
- You withdraw after 5 years of service, or
- You withdraw due to illness, company closure, or unavoidable circumstances, or
- You transfer EPF (no tax applies), or
- You withdraw after retirement (age 58).
Final Word
EPF is one of the most powerful financial protections for Indian employees. But small mistakes—especially around PAN and KYC—can lead to huge tax losses. Take a few minutes to verify your EPFO profile, update your KYC, and understand the rules clearly.
This simple awareness can save you thousands of rupees and ensure you receive your full EPF benefits without delay.
4esind.com – Empowering Employees with the Right Information.
