Is PAN required for EPF withdrawal?

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PAN is required during EPF withdrawal/settlement if you do not want some excess tax to be deducted from your EPF account. If you fail to submit PAN, the tax deducted at source (TDS) can be as high as 34.6%.

Is EPF withdrawal taxable?

EPF or Employee’s Provident Fund is taxable if withdrawn before you complete 5 years of service. These 5 years do not have to be with the same employer and they do not have to be continuous. However, you have to complete the same before your EPF balance can be tax-free.

How much tax is payable on EPF?

If you withdraw your EPF before completing 5 years of service, the withdrawal is taxable as follows:

1. The interest paid on the EPF is taxable at your slab rate
2. The Employer and Employee contributions are taxable at your slab rate. This is because the deduction given to EPF contributions in previous years is reversed. These contributions now become taxable.  

What if excess tax is deducted?

If you fail to furnish PAN and tax is deducted at 34.6% or any other rate higher than your slab rate, you can claim a refund from the Income Tax Department. However, refunds are paid after filing income tax returns at the end of the financial year and there are often delays in paying these refunds.

PAN for EPF Partial Withdrawals

PAN is not required for partial withdrawal or advances under Para 68 of the Scheme. These are withdrawals/advances for medical treatment, purchase of house and education/marriage of children. You can find out more about them here.

PAN for EPF Full Withdrawals

For full settlement cases, TDS would be deducted if the total amount is more than ₹50,000/- and service period is less than 5 years. The TDS amount changes according to whether you have given PAN. Full withdrawal due to unemployment of two months or more would come under this category. The following conditions apply:

• If your withdrawal is between 50,000 and Rs 2.5 lakh, no TDS would be cut if PAN is provided or Form 15G/H is submitted (if applicable). Form 15 H/G apply if your income is below the taxable limit of 2,50,000.
• For amounts, more than 2.5 lakh TDS would be deducted at 10% if PAN is provided
• For amounts greater than 2.5 lakh, if PAN is not provided, TDS would be deducted at the maximum marginal rate of 34.608%.
• Note: There is no TDS if your service is more than 5 years or amount is less than ₹50,000 and hence you do not need to submit PAN in this case.

PAN is an important KYC document for online settlement also due to the reasons stated above. You can update PAN details through the unified member portal or through the UMANG App while applying for settlement.