Rules for EPF Withdrawal
EPF is a project launched to support the people after their retirement and present them with a fund source upon completing their service in an institution. EPF schemes present the option of withdrawal before retirement; nevertheless, they should be used only as a last resort. Following are the rules for the EPF Withdrawal:
- PF withdrawal within the first 5 years of account opening draws tax.
- It is not compulsory to withdraw the PF account when an employee changes the employer, as the PF can be passed on to the new account.
- With EPF, employees also have an option of loan.
- Employees are presented with a choice of withdrawing 90% of the PF account balance after 54 years.
- If a person is jobless for 1 month, he can take out 75% of the PF balance and the remaining 25% after the 2nd month of unemployment.
Eligibility for different Types of EPF Withdrawals
According to the EPF Act, the final or partial PF withdrawal is permitted under the following circumstances:
- After reaching 55 years and retiring from work, one can withdraw the entire amount of EPF.
- Workers can withdraw 90% of the EPF corpus 1-year before retirement, granted the individual is not less than 54 years old.
- If a person is jobless for 1 month, he can take out 75% of the PF balance.
- The remaining 25% after the 2nd month of unemployment.
- At least 7 years of working is needed to be qualified for PF withdrawal.
- 50% of the employee’s portion can be withdrawn for marriage.
- An employee can also take out PF fund for his/her sibling or child’s marriage.
- A worker can withdraw an overall corpus or 6 times the monthly salary(whichever is lower) from the PF for medical treatment purpose.
- There is no lock-in period for withdrawal of funds in case of medical emergencies.
- The withdrawal is suitable for the medical treatment of self, spouse, children and parents.
Repayment of home loan:
- The worker can withdraw up to 90% of the corpus if the house is enrolled in their name or held jointly.
- A minimum of 3 years of service fulfilment is expected to withdraw the amount.
Renovation and reconstruction of the house:
- An individual completes a minimum of 5 years of service, and the house should be registered under his/her name or held collectively with the spouse to withdraw the EPF amount for renovation.
- The employee can withdraw 12 times his monthly salary from his EPF account.
- PF can be withdrawn even if you are purchasing a new house or property.
PF withdrawal before 5 years of Service
EPF withdrawal before the fulfilment of 5 years of consecutive service draws TDS on the withdrawal amount. However, if the withdrawal amount is below ₹ 50,000, no TDS is subtracted. Rules for EPF withdrawal before 5 years of service are:
- EPF contribution is made in 4 parts – Employer’s contribution, employee’s contribution and interest on both deposits.
- If the individual has demanded tax exemption on EPF contribution for past years, as per Section 80-C, all 4 parts will be taxable.
- If the individual has not commanded tax exemption in the previous year on EPF, the employee’s contribution part will be tax-free at the moment of withdrawal.
- The tax will be suitable in the year of withdrawal; nevertheless, the remuneration will be done each year.
Withdrawal Rules after Retirement
Rules for EPF withdrawal after retirement is:
- An individual can petition for the final settlement when he approaches the age of 58 years.
- Taking EPS into consideration, if an employee has not completed 10 years of service at the moment of retirement, he can withdraw the entire EPS amount along with his/her EPF.
- If the person achieves 10 years of service, then he/she has to present a pension certificate.
- Withdrawal of funds from EPF accounts post-retirement is absolutely tax-free.
- The interest obtained on the EPF fund after retirement draws tax.
PF Withdrawal for Home Loans
Employees can use the EPF fund either for making down payments or paying EMIs for their new residence. Employees can apply for 90% of the accrued amount from the EPF funds. They can only avail of this convenience after fulfilment of 3 years of service.
Important laws related to Home loans on EPF are:
- The individual should be part of a designated housing society with at least 10 members.
- The member is expected to present the authorization request for paying EMIs from PF.
- Employees can also avail of this facility with PMAY.
Documents Required for EPF withdrawal
.The documents needed for the EPF withdrawal form are:
- Forms such as Form 10C, Form 10D, Form 19 and Form 31.
- ID proof
- Proof of Residence
- Bank account statement.
- A blank and voided cheque.
- 2 revenue stamps.
Procedure to withdraw the Employees Provident fund
Provident Fund Withdrawal via Old Form
Steps for EPF withdrawal via the old form are as follow:
- Individuals are expected to reach the HR department of their previous company and get Form 16. You can also withdraw the form from the EPFO official website
- They are expected to input all the necessary details required in the form.
- A duly filled form should be presented to the employer. The employer will sign and approve the form and send it to the concerned authorities for additional processing.
If all the filled information is genuine and the person is eligible for the withdrawal, the sum will be credited to the Bank account.
Provident Fund Withdrawal via New Form
Under this, individuals are not needed to get the permission of the employer. Some of the requirements for this system are as follow:
- Update the Aadhaar number in the UAN portal
- Aadhaar should be verified by the company and linked to UAN
- Individuals are expected to fill the form online on the EPF member portal
- A duly filled form should be presented.
Taxation on EPF Withdrawal
Case 1: If the amount withdrawn is less than ₹ 50,000 before completion of 5 years of service, submit the duly filled form, and you will get the withdrawn amount in your bank account in a fortnight, then no TDS will be deducted. If you fall under the taxable bracket, then you have to pay TDS in return for EPF withdrawal.
Case 2: If the amount withdrawn is greater than ₹ 50,000 before completion of 5 years of continuous service, then TDS will be deducted at 10% if PAN is furnished; no TDS will be levied in case Form 15G/15H is submitted.
Case 3: If the withdrawal of EPF is made after 5 years of continuous service or PF is transferred, or if the employee is terminated due to the employee’s ill health, then no TDS will be deducted, and withdrawal will be tax-exempt.
For further information and queries, please visit the Dialabank website.
FAQs about EPF Withdrawal
✅ How many times can we withdraw PF advance?
The number of times an individual can apply for the EPF withdrawal depends on various factors. The various reasons that allow one to avail an early withdrawal of the PF are marriage, medical treatment, education, home loan repayment, purchase of a house, etc.
✅ Can I withdraw my full PF amount before retirement?
Yes, an individual can withdraw the PF amount before retirement. If an individual remains unemployed for one month, he can withdraw 75% of his EPF amount. The remaining 25% can be withdrawn if the member remains unemployed for more than two months.
✅ Why cannot I withdraw my EPF balance while working?
EPF balance cannot be withdrawn during employment because EPF is a long-term retirement savings scheme. The money can be withdrawn only after retirement. Withdrawals are allowed only in a few cases, like a medical emergency.
✅ Is provident fund money taxable?
The contribution made to the PF by the employees’ and the employer is not taxable. Similarly, if the employee withdraws at or after retirement, the PF money is non-taxable. However, if the employee withdraws the amount before retirement, the amount withdrawn is liable for the tax.
✅ Can I get partial PF withdrawals for emergency purposes?
Yes, an individual can get a partial withdrawal for emergency cases. EPFO allows partial withdrawals for certain circumstance such as medical emergencies, education, marriage, home loan repayment, purchase or renovation of a house, etc.