EPFO New Rules 2026: Employees planning to withdraw money from their Employees' Provident Fund (EPF) account should be aware of an important change in tax-related documentation. From the financial year 2026–27, eligible taxpayers may need to use Form 121 instead of the earlier Forms 15G and 15H when seeking relief from Tax Deducted at Source (TDS) on qualifying PF withdrawals.

The change is linked to the new income-tax framework introduced for Tax Year 2026–27.

According to a report published on October 9, 2026, Form 121 is intended to simplify the self-declaration process for individuals whose estimated tax liability is nil.

However, submitting Form 121 does not automatically make every PF withdrawal tax-free. Employees must satisfy the applicable eligibility conditions, and the tax treatment of the withdrawal continues to depend on factors such as service duration, withdrawal amount and the circumstances under which the money is withdrawn.

What Has Changed in EPF Withdrawal Rules for 2026?

Earlier, eligible taxpayers could submit Form 15G or Form 15H to request non-deduction of TDS on certain payments, including qualifying premature EPF withdrawals.

Form 15G was generally used by eligible individuals below 60 years of age, while Form 15H was intended for eligible senior citizens.

Under the new framework, Form 121 serves as the relevant self-declaration form for eligible taxpayers seeking non-deduction of tax at source.

The change concerns tax documentation and does not mean that the basic EPF withdrawal process has been completely replaced.

When Is TDS Deducted on PF Withdrawal?

TDS may apply when an employee withdraws the accumulated EPF balance before completing five years of qualifying continuous service.

Under the rules described in the report, a premature withdrawal exceeding ₹50,000 may attract TDS at 10% where the applicable conditions are met and a valid PAN has been provided.

However, TDS is not automatically deducted from every PF withdrawal made before five years.

Certain circumstances, including eligible transfers and specified exceptions, may receive different treatment.

The applicable tax rules must be examined before determining whether a particular withdrawal is subject to TDS.

What Happens If You Withdraw ₹1 Lakh Before Five Years?

Consider an employee who withdraws ₹1,00,000 from an EPF account after completing three years of qualifying service.

If the withdrawal is subject to TDS at 10% and no valid exemption from deduction applies, the illustrative calculation would be:

This is a simplified example.

The actual deduction depends on the applicable legal provisions, valid PAN details, eligible declarations and other relevant circumstances.

TDS is also not necessarily the employee's final tax liability. The final amount of tax payable or refundable is determined when the income-tax return is assessed according to the applicable rules.

What Is Form 121?

Form 121 is a self-declaration document used by eligible taxpayers to request that tax should not be deducted at source on specified income or payments.

The declaration generally requires the taxpayer to confirm that the estimated tax liability for the relevant tax year is nil and that other prescribed conditions are satisfied.

For eligible PF withdrawals, the form can help prevent unnecessary TDS where the taxpayer legally qualifies for non-deduction.

However, the declaration must be accurate.

Submitting incorrect information or claiming relief without meeting the required conditions can create tax-compliance problems.

Who Can Submit Form 121 for PF Withdrawal?

Not every employee withdrawing money from EPF is eligible to submit Form 121.

The relevant conditions generally include the following:

• The taxpayer must qualify to submit the prescribed self-declaration.
• The estimated tax liability for the relevant tax year must meet the required nil-tax condition.
• The taxpayer must provide the identification and tax details required under the applicable rules.
• The PF withdrawal must be of a type for which the declaration can legally be used.
• Any additional eligibility restrictions under the new tax framework must be satisfied.

Employees should check the final prescribed instructions and EPFO's accepted submission procedure before filing the form.

Is Form 121 Required for Every PF Withdrawal?

No. Form 121 should not be confused with the normal EPF withdrawal claim form.

An employee withdrawing PF after completing the qualifying service period may not need a declaration for non-deduction of TDS if the withdrawal is already exempt under the applicable rules.

Similarly, a person transferring PF from one eligible account to another generally follows the transfer procedure rather than treating the transaction as an ordinary taxable withdrawal.

Form 121 becomes relevant when a payment is otherwise subject to TDS provisions but the individual qualifies to request non-deduction through the prescribed declaration.

What Happens After Five Years of Continuous Service?

EPF withdrawals after five years of qualifying continuous service generally receive favourable tax treatment, subject to the applicable conditions.

Importantly, continuous service may include eligible periods of employment with previous employers when the PF balance has been properly transferred.

Therefore, changing jobs does not necessarily restart the five-year qualifying period.

Employees who have worked for multiple employers should check whether their previous PF service has been correctly reflected in their EPFO records.

This can help avoid confusion when determining the tax treatment of a withdrawal.

Does Form 121 Make Your Entire PF Balance Tax-Free?

No. This is one of the most important distinctions employees should understand.

Form 121 concerns the deduction of tax at source.

It does not independently determine whether the underlying PF withdrawal is taxable or exempt.

A taxpayer may qualify for non-deduction of TDS in a particular situation but still need to disclose taxable income while filing the income-tax return.

Similarly, if tax has been deducted even though the taxpayer's final liability is lower, a refund may be available through the applicable income-tax return process.

The final tax treatment depends on the law, not merely on whether a self-declaration form was submitted.

How to Avoid Problems While Withdrawing PF

Employees planning a PF withdrawal should review their records before submitting a claim.

First, check the service history associated with the Universal Account Number (UAN).

Next, verify that the PAN, Aadhaar and bank account details required for the claim are correctly recorded.

Employees should also determine whether the withdrawal is being made before or after five years of qualifying service.

If the withdrawal could attract TDS, they should examine whether they qualify to submit Form 121.

The exact process for submitting the declaration should be confirmed through the official EPFO claim system or the applicable instructions.

Where Can Employees Check Official Information?

Employees can visit the official Employees' Provident Fund Organisation website for information about PF withdrawals, UAN services and relevant circulars.

They can also consult the Income Tax Department portal for information about tax declarations and the applicable income-tax rules.

It is advisable to rely on official instructions rather than unofficial messages claiming that Form 121 is compulsory for all PF withdrawals.

Final Takeaway

The introduction of Form 121 under the new income-tax framework is an important development for employees seeking relief from TDS on qualifying PF withdrawals during Tax Year 2026–27.

The form replaces the earlier Form 15G and Form 15H declaration framework for relevant cases, but it is not required for every EPF withdrawal.

Employees withdrawing PF before completing five years of qualifying service should check whether TDS applies, whether their withdrawal exceeds the relevant threshold and whether they are eligible to submit Form 121.

Most importantly, Form 121 is a declaration for non-deduction of tax at source—not an automatic exemption from income tax.

Based on the ABP Live report updated October 9, 2026. Tax applicability, form eligibility and submission procedures should be checked against current Income Tax Department and EPFO instructions.