EPF withdrawal for NRIs now follows a new rulebook. India's Code on Social Security, 2020 replaced the 1952 Act, the EPF Scheme, 2026 replaced the old scheme, and the wage ceiling for compulsory coverage rose from INR 15,000 to INR 25,000 a month on 17 September 2026. If you now live in Aurora, Toronto or Mississauga, our searches found nothing published by the IRS, FinCEN or the CRA on Indian EPF by name, so several reporting questions are open. This guide separates verified rules from positions you must choose, and it extends our cross-border retirement planning guide and foreign retirement account tax guide.
How does EPF withdrawal for NRIs work under the 2026 Scheme?
The Code applies to establishments with 20 or more employees, and the EPF Scheme, 2026 (G.S.R. 525(E), 29 June 2026) replaced the 1952 Scheme, so older paragraph numbers are obsolete. We read the Scheme through a published copy, as EPFO blocks access from outside India; your Indian Chartered Accountant (CA) confirms references.
| Item | Rule (October 2026) |
|---|---|
| Employee | 12% of wages |
| Employer | 12%: 8.33% to the pension fund (EPS) on wages up to the ceiling, 3.67% to EPF |
| Ceiling | INR 25,000 a month from 17 September 2026 (INR 15,000 since September 2014); above it, employee contributions are voluntary and employer matching is optional |
At the ceiling, 12% is INR 3,000 a month a side (INR 1,800 before).
The Scheme requires Aadhaar, an Aadhaar-seeded Indian bank account, PAN and your permanent Universal Account Number (UAN), and pays only into Indian bank or post-office accounts. We found no NRI-specific route for those without them. See PAN, TAN and Aadhaar and NRE, NRO and FCNR rules.
Interest was 8.25% for FY 2024-25. For FY 2025-26 the Central Board of Trustees recommended 8.25% on 2 March 2026 (PIB); news reports ratification in June 2026, but no official page confirms it.
Withdrawal rules
- Partial: three heads (essential needs, housing, special circumstances) after 12 months' membership; up to 100% of the eligible balance, with 25% of contributions plus interest kept as a minimum.
- Full: retirement at 55, permanent incapacity, retrenchment, voluntary retirement, or immediately before migrating for permanent settlement or employment abroad. Otherwise 12 months out of covered employment (previously 2).
- EPS benefit: payable 36 months after the last contribution fell due (previously 2 months).
- Transfer: a new covered job allows transfer; withdrawing first makes you a fresh member.
- Inoperative: after 55, permanent migration or death, no claim within 36 months of the amount falling due moves it to an Inoperative Account with no further interest. Only the Scheme text names the migration trigger.
How is an EPF withdrawal taxed in India?
The Income-tax Act, 2025 (in force 1 April 2026, as amended by the Finance Act, 2026) renumbered these rules from tax year 2026-27 (transition guide). The provisions below are verified in the Act text; the Income-tax Rules, 2026 were not checked.
| Topic | Provision | Rule |
|---|---|---|
| Contributions | s. 17(1)(h), s. 123, s. 202 | Employer contributions to recognised PF, pension and superannuation funds above INR 7,50,000 a tax year in aggregate are a perquisite; the Finance Act, 2026 dropped the "above 12% of salary" limb from 1 April 2026. The employee deduction is unavailable in the default regime unless you opt out |
| Withdrawal | Schedule XI, Part A, paras 8 and 9 | Excluded after 5 years' continuous service (earlier employers count if transferred), service ending by ill health, closure or other cause beyond your control, or transfer to another recognised fund; otherwise taxed as if unrecognised |
| TDS | s. 392(7), s. 397(2)(b) | 10% on INR 50,000 or more where taxable; 20% without PAN |
Migration is not a listed exception, so your CA decides whether an exit qualifies. Section 392(7) has no residence condition, but we found no official guidance on non-resident rates or treaty relief, so we state no NRI TDS rate.
Who has to do what: US, Canada and India compared
No IRS publication, manual section or form instruction we searched names Indian EPF, though unpublished items cannot be excluded. Read the matrix as questions, not rulings.
| Item | US citizen or resident | Canadian resident | In India, moving or returning |
|---|---|---|---|
| FBAR | Unsettled for EPF; the filing threshold is aggregate foreign accounts over USD 10,000 at any time in 2025 | Only if also a US person | From the year you become a US person |
| Form 8938 | Foreign pension interest, Part VI, once thresholds are met | Only if also a US person | As for the FBAR |
| Forms 3520 and 3520-A | Unsettled (Rev. Proc. 2020-17) | Only if also a US person | As for the FBAR |
| US tax and credit | Unsettled; Form 1116 only for a legal and actual Indian tax | Only if also a US person | From your US residency start date |
| T1135 and Canadian return | Not applicable | Unsettled; T1135 above CAD 100,000 cost; foreign pension income on line 11500, lump sums see line 13000 | Once you are a Canadian resident |
FBAR and Form 8938
IRM 4.26.16.3.3 (August 2025) says the FBAR retirement exception covers US plans only and that foreign plans such as a Canadian RRSP or Mexican AFORE are normally reportable. Whether EPFO counts as a financial institution is open. On the FBAR, penalties for assessments from 17 January 2025 are up to USD 16,536 non-willful (per report) and the greater of USD 165,353 or 50% of the balance if willful.
On Form 8938 a foreign pension interest is valued at year-end fair market value or, if unknown, at distributions received that year (zero if none). Unmarried thresholds for 2025: USD 50,000 at year end or 75,000 at any time if you live in the US; 200,000 and 300,000 if you live abroad (330 days outside the US in 12 months, or bona fide foreign residence). Joint thresholds are higher. The penalty is USD 10,000, plus up to USD 50,000 after IRS notice. Whether any EPF or EPS part is non-reportable "social security" is unanswered.
Forms 3520 and 3520-A
Revenue Procedure 2020-17 exempts a tax-favored foreign retirement trust meeting six conditions, including annual local tax reporting, capped contributions and restricted withdrawals. No IRS statement says EPF qualifies, and whether it is a foreign trust at all is open. Penalties under the current instructions: Form 3520, the greater of USD 10,000 or 35% of gross transfers or distributions; Form 3520-A, the greater of USD 10,000 or 5% of owned assets. See Forms 3520 and 3520-A.
US income tax, treaty and Canada
One reading puts EPF under IRC 402(b): employer contributions taxed as they vest, distributions under section 72. That is practitioner reasoning, not IRS guidance. A competing view treats EPF or EPS as social-security-like under treaty Article 20(2); neither is settled. Article 20(3) defines a pension as periodic, and the Technical Explanation puts a lump sum under Other Income (Article 23). A treaty-based return position generally needs Form 8833 (USD 1,000 penalty); see the US-India treaty guide. Indian TDS may support a Form 1116 credit if it is a final Indian tax on income also taxed in the US, and not where a refund is reasonably certain.
For Canada, the T1135 excludes active-business property, foreign affiliates, personal-use property and certain exempt trusts, with no general foreign pension exclusion. Neither the form, the CRA Q&A nor the CRA foreign pension page (modified 20 January 2026) names provident funds. Penalties are in our T1135 guide.
Worked example: one EPF balance, two exchange rates
Illustration only. Ravi, an unmarried US citizen in Naperville, has an EPF account from a Pune job. In 2025 its highest balance was INR 42,00,000, and it was credited INR 3,00,000 of interest.
- FBAR: convert the maximum value at the Treasury rate for 31 December 2025. We state no rate; use Treasury's Reporting Rates of Exchange.
- Income: if his adviser treats the interest as taxable now, the IRS accepts any posted rate used consistently, such as its 2025 yearly average of 87.133 INR per USD: INR 3,00,000 is about USD 3,443.
- Threshold: at that average the balance is near USD 48,200, which is not the FBAR figure. It reaches USD 50,000 at 84.00 INR per USD, so any rate below that would put it over the unmarried Form 8938 year-end threshold. Record each rate source.
Social security agreements: what the Scheme implies
SSA's list of agreements in force omits India and lists Canada (since 1 August 1984). India and Canada have had their own agreement since 1 August 2015, letting an employer-sent worker stay in the home system for up to 60 months initially (CRA page archived). The Scheme exempts a detached "international worker" who pays into the home system, but with no US agreement it offers a US secondee no such exemption; whether both Indian and US contributions are then due is unconfirmed. See US Social Security for foreign workers.
NRI exit checklist: leaving India
- Download the passbook and annual statements for every employer. An old balance left behind is still your asset, so include it when you test thresholds under your chosen position.
- Sort out Aadhaar, PAN, UAN and an operating Indian bank account before you leave.
- Decide whether to withdraw immediately before migration or leave the balance; the 36-month rule ends interest.
- Ask your CA about the 5-year rule, TDS at 10% or 20% and your residential status, and collect the TDS certificate.
- Check US timing: you are a US resident only from the residency starting date, but a green card holder already is one (residency tests).
- Write down your US and Canadian positions, apply them every year, and keep EPF statements, Indian tax certificates and FBAR records for 5 years (India-to-US move checklist).
What if you missed a filing?
- Streamlined Foreign Offshore (IRS, 11 July 2026): non-willful failures by people with no US abode who spent 330 full days outside the US in at least one of the last three due-date years. File three years of returns, six years of FBARs and Form 14653, and pay tax and interest; no failure-to-file, accuracy, information-return or FBAR penalties apply.
- Streamlined Domestic Offshore (10 July 2026): the same non-willful certification (Form 14654) for people living in the US, with a 5% penalty on the highest aggregate foreign asset balance.
- Delinquent filings: if not under examination or contacted, file late FBARs with a reason; the IRM says no penalty applies to a non-willful, reasonable-cause failure with accounts properly reported. Late information returns need a reasonable-cause statement, and penalties may still be assessed.
Use these only where the non-willful statement is true. For Canada, see the CRA voluntary disclosures guide.
How we can help
From Aurora, Illinois, we handle the US side: we review each Indian balance, document your FBAR, Form 8938 and Forms 3520 and 3520-A position, and coordinate with your Indian CA and Canadian CPA so the three filings agree. We do not prepare Indian or Canadian returns or promise results. See foreign account and asset reporting, the retirement and savings glossary and the India hub.
Frequently asked questions
Can an NRI withdraw EPF after settling abroad?
Yes, immediately before migrating for permanent settlement or work abroad. Afterwards you need 12 months out of covered employment.
Does EPF interest continue after I leave India?
Not indefinitely. After a permanent migration, interest stops if no claim is made within 36 months of the amount becoming payable.
What TDS applies to an NRI withdrawal?
10% on INR 50,000 or more where the balance is taxable (s. 392(7)), and 20% without PAN (s. 397(2)(b)). No official NRI rate was found.
Is EPF reportable on the FBAR or Form 8938?
No IRS or FinCEN statement names it, but the IRM treats foreign retirement plans such as an RRSP as normally reportable. Document a position.
Does a Canadian resident report EPF on the T1135?
Unsettled. The threshold is CAD 100,000, and the CRA text names no provident fund exclusion.
Does the US-India treaty exempt an EPF lump sum?
Not on the text verified. Pensions are periodic under Article 20(3), so a lump sum falls under Other Income.
Official sources
- PIB: 238th Central Board of Trustees meeting, EPF withdrawal reforms (13 October 2025)
- Ministry of Labour and Employment: EPF wage ceiling raised to INR 25,000 (16 September 2026)
- Income Tax Department: Income-tax Act, 2025, as amended by the Finance Act, 2026
- IRS: Internal Revenue Manual 4.26.16, Bank Secrecy Act, Title 31 and FBAR
- IRS: Revenue Procedure 2020-17, tax-favored foreign retirement trusts
- IRS: Yearly average currency exchange rates
This page summarizes public guidance in plain language. If anything here differs from the official source, the official source controls.
General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.