The Employees' Provident Fund (EPF) is a valuable retirement savings scheme in India. However, if you withdraw your EPF balance before completing a certain period of service, it may be subject to Tax Deducted at Source (TDS). Understanding how TDS works on EPF withdrawals is crucial for planning your finances and avoiding unexpected tax burdens.
What is TDS?
Tax Deducted at Source (TDS) is a system in which the income tax department mandates the direct deduction of tax from certain income sources, including salaries, interest on fixed deposit, and even EPF withdrawals in specific cases. This mechanism ensures timely tax collection and eases the tax-paying process for individuals.
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