EPF, PPF & VPF Tax Rules: 5-Year Rule, 10% TDS, ₹2.5L Interest Cap
EPF after 5 yrs continuous service = tax-free; before that + above ₹50k = 10% TDS. Interest on employee contribution above ₹2.5L/yr is taxable. PPF: EEE in both regimes, minor's PPF gives guardian 80C (combined ₹1.5L cap).
EPF withdrawal rules
| Situation | Tax + TDS |
|---|---|
| 5+ yrs continuous (job changes + transfers count) | Fully exempt (10(12)) — no TDS |
| <5 yrs, amount > ₹50,000 | Taxable at slab + 10% TDS (192A → 392(7)); far higher without PAN — submit PAN! |
| <5 yrs, amount ≤ ₹50,000 | No TDS (still technically taxable) |
| Termination / ill-health / employer closure | Exempt even before 5 yrs |
| Transfer on job switch (Form 13) | No tax, service continuity preserved — always transfer, never withdraw |
PPF, VPF, SSY, EPS in 60 seconds
- PPF: 15 yrs (+5-yr extensions), ₹1.5L/yr, 7.1% — EEE in both regimes (only the 80C needs old regime). Minor via guardian; self+minor deposits share the ₹1.5L cap.
- VPF: extra EPF at will — same tax rules + 80C. Easiest raise to retirement savings.
- Interest >₹2.5L/yr: interest on employee EPF/VPF contribution above ₹2.5L/year (₹5L if no employer contribution) is taxable yearly.
- SSY: girl child <10, ₹1.5L/yr, EEE. EPS pension: taxable as salary.
By TaxSetu Editorial Team · Last reviewed: 7 October 2026
Based on the Income-tax Act 2025, Income Tax Rules 2026 and CBDT notifications; sections per the Income-tax Act 1961 (as amended) with 2025-Act mappings where notified · Verify on the official portal: incometax.gov.in
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Frequently Asked Questions
Yes — 5 years of continuous service (job changes and Form-13 transfers count) makes EPF fully exempt under 10(12), with no TDS.
10% if the amount exceeds ₹50,000 (192A, now 392(7)) — and far higher without PAN. Below ₹50k there's no TDS.
Yes — interest on employee contribution above ₹2.5L/year (₹5L if no employer contribution) is taxable yearly.
Yes — PPF stays EEE in both regimes; only the 80C contribution deduction needs the old regime. A minor's PPF lets the guardian claim 80C within the shared ₹1.5L cap.