Tax deducted on EPF withdrawals has been reduced to 20% from 30% in non-PAN cases in Budget 2023. According to the announcement made by Finance Minister Nirmala Sitharaman, “Reducing the TDS rate from 30% to 20% on the taxable portion of EPF withdrawal in non-PAN cases.”
The reduction in the TDS rate on EPF withdrawal will help individuals whose PAN is not updated with the records in the EPFO.
According to the current income tax laws, TDS is deducted on the EPF withdrawal if the money is redeemed within 5 years of the opening of the EPF account. If the PAN is available with the EPFO, then TDS is deducted at the rate of 10% if the withdrawal amount exceeds Rs 50,000. However, if PAN is not available, then TDS is deducted at 30%.
Do note that if the EPF withdrawal is made after 5 years, then no TDS is deducted.
