EPF TDS Exemption: Form 121 Replaces 15G and 15H from 2026-27

Employees planning to withdraw money from their Employees’ Provident Fund accounts face an important procedural change from tax year 2026-27. The Employees’ Provident Fund Organisation has clarified that Forms 15G and 15H will no longer be accepted for claiming exemption from tax deducted at source on eligible EPF withdrawals. Members must instead submit Form 121, introduced under the Income Tax Act, 2025 and the corresponding Income Tax Rules, 2026.

Why the Change Matters

TDS on EPF withdrawals is governed by specific conditions. Under the relevant provision of the Income Tax Act, 2025, tax may be deducted at source when a member withdraws provident fund accumulations before completing five years of continuous service, provided the taxable withdrawal exceeds ₹50,000. In such cases, TDS is generally deducted at 10 per cent, subject to the applicable rules and the availability of a valid Permanent Account Number.

For many years, eligible members whose estimated total income for the year resulted in nil tax liability could submit Form 15G (typically used by resident individuals below 60 years) or Form 15H (used by resident senior citizens) to request that TDS not be deducted. From tax year 2026-27 onwards, that route is closed. The EPFO has stated clearly that these older forms are no longer valid for this purpose.

What Form 121 Is and What It Does

Form 121 is a statutory self-declaration prescribed under the Income Tax Rules, 2026. Through this form, an eligible taxpayer declares that the tax payable on their estimated total income for the relevant tax year will be nil. On the basis of a valid declaration, the payer—in this case the EPFO—is permitted not to deduct tax at source on the specified payment.

The form consolidates the earlier age-based declarations into a single format. It removes the previous distinction between Form 15G and Form 15H, creating a uniform process for all eligible resident individuals regardless of age. Hindu Undivided Families and certain other specified resident entities may also use it under the prescribed conditions. Companies, firms and non-residents are not eligible.

It is important to understand the precise effect of the declaration. Form 121 does not render an EPF withdrawal tax-free. It only allows an eligible person whose estimated tax liability is nil to request non-deduction of TDS at the time of payment. If the conditions are not met, or if the declaration is incomplete or inaccurate, TDS may still be deducted. The ultimate tax liability, if any, continues to be determined when the individual files the return of income.

When TDS Applies and When the Form Helps

Members who have completed five years of continuous service generally do not face TDS on withdrawal under the relevant rules. Those withdrawing smaller amounts that do not exceed the prescribed threshold also fall outside the TDS requirement in many cases. The need for Form 121 arises primarily when a member with less than five years of continuous service seeks to withdraw an amount that would otherwise attract TDS, and the member’s overall estimated income for the year is such that no tax is payable.

Before submitting the form, members should carefully assess three points: the length of their continuous service, the amount they intend to withdraw, and their estimated total income for the tax year. Only if the conditions for non-deduction are satisfied should the declaration be made. Submitting an incorrect declaration can create compliance issues later.

A valid Permanent Account Number is mandatory. A declaration submitted without a PAN is treated as invalid under the instructions applicable to the EPFO.

Practical Steps for Members

The change takes effect from tax year 2026-27, which begins on 1 April 2026. Members who plan withdrawals after that date and who qualify for non-deduction of TDS should use Form 121 rather than the older forms. Submitting Form 15G or 15H after the transition will not prevent TDS from being deducted.

The declaration is best furnished in time so that the payer can process the payment without deducting tax. Ideally it should be submitted before the income is credited or paid. Members may also choose to file it at the beginning of the tax year if they anticipate multiple relevant payments.

Once received, the EPFO, as the payer, allots a Unique Identification Number to the declaration and follows the prescribed process for reporting to the Income Tax Department. The administrative responsibility for the accuracy of the information provided remains with the member making the declaration.

Continuity in the Underlying Tax Rules

While the form has changed, the substantive rules governing when TDS applies to EPF withdrawals remain the same. The five-year continuous service condition, the monetary threshold, and the rate of deduction continue to operate as before. The introduction of Form 121 is a procedural simplification aligned with the new income-tax framework rather than a change in the taxability of provident fund withdrawals themselves.

For members who do not meet the eligibility conditions for non-deduction, TDS will continue to be deducted in accordance with the law. Those members can claim credit for the tax deducted when they file their return of income, subject to the normal rules.

Preparing for the Transition

Employees who expect to withdraw EPF balances in or after tax year 2026-27 should familiarise themselves with Form 121 and the conditions attached to it. Checking service history, estimating annual income accurately, and ensuring that a valid PAN is on record are practical steps that reduce the risk of unexpected tax deduction or later compliance difficulties.

The EPFO has communicated the change through official channels, emphasising that Form 121 is the prescribed route for claiming TDS exemption from the relevant tax year. Members who previously relied on Form 15G or Form 15H will need to adapt to the single, unified declaration.

In summary, the shift to Form 121 streamlines the declaration process by eliminating the age-based distinction of the earlier forms. It does not alter the fundamental conditions under which TDS is applicable on premature EPF withdrawals. Eligible members with nil estimated tax liability can continue to request non-deduction of tax, provided they use the correct form and meet the prescribed requirements. Careful attention to eligibility and timely submission remain the best ways to ensure that the withdrawal is processed as intended under the new framework.

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