EPFO Update: New Income Tax Form 121 Replaces Old TDS Exemption Forms

New Delhi: There has been an important change in the tax rules related to PF withdrawal for the account holders of Employees Provident Fund Organization (EPFO). Form 15G and Form 15H will no longer be valid for getting exemption from Tax Deducted at Source (TDS) while withdrawing PF from tax year 2026-27. Instead, eligible account holders will have to submit Form 121. This arrangement, implemented under the Income Tax Act, 2025, aims to unify the process used for TDS exemption. However, filling the new form will not automatically make every person's PF withdrawal tax-free. 

Which form needs to be filled now?

EPFO has clarified on social media platform X that Form 121 will have to be used for TDS exemption from tax year 2026-27. Earlier, account holders used to submit Form 15G or Form 15H as per their age and eligibility. Now a single declaration form has been implemented in place of both the old forms. This change has been made in accordance with the new Income Tax Law and Income Tax Rules. 

What was the difference between Form 15G and Form 15H?

Earlier, eligible resident taxpayers below 60 years of age could request not deducting TDS through Form 15G, while for senior citizens aged 60 years and above, there was a provision for Form 15H. Both forms were used under prescribed conditions when tax was not payable on the individual's estimated income. Now for TDS exemption related to EPF, Form 121 will have to be used instead. 

Who can get TDS exemption from Form 121?

Form 121 is for eligible resident taxpayers who do not have to pay any income tax on their estimated total income for the relevant tax year. Through this, the account holder can request the paying institution not to deduct TDS on the eligible payment. However, submitting the form does not automatically grant exemption. The applicant will have to fulfill all the necessary conditions and will also have to provide valid PAN information. Non-resident Indians cannot avail themselves of the benefits of this declaration.

How much can be withdrawn as TDS? 

The status of TDS on withdrawal of money from EPF depends on how long the employee has been continuously employed and the amount being withdrawn. Normally TDS may be applicable on withdrawals before completion of five years of continuous service. If the amount withdrawn is more than Rs 50,000, TDS can be deducted under prescribed conditions. In such cases, eligible account holders can claim exemption through Form 121, provided no tax is payable on their estimated income. 

What things should be kept in mind before withdrawing PF?

Account holders should check their total service period, amount to be withdrawn, estimated annual income and validity of PAN before applying for withdrawal. If they do not fulfill the eligibility criteria of Form 121, they will not be exempted from TDS merely on the basis of submission of the form. This change is mainly related to the process of claiming exemption and not the imposition of a new tax on PF withdrawals. Therefore, before applying, it is important to see the official instructions of EPFO  and Income Tax Department.