EPF (Employees Provident Fund) is a popular savings scheme for employees in India. The Central Government established this savings scheme in 1952, for employees of the organised sector. Today, employees in the private sector can secure their financial future with this scheme. While it is a good way to save for retirement, one may need to withdraw funds from the EPF account for financial emergencies.
This blog helps you understand the PF withdrawal rules, how to apply, eligibility criteria, documents required and taxation. Read on!
People should try not to withdraw funds from EPF accounts as it is meant for their retirement. But, if there is a financial emergency or an individual needs money for some purpose, he or she can withdraw money. The situations under which you can withdraw money from your EPF account while you are still working are:
PF account holders can withdraw up to 50% of the total employee contribution from the employee provident fund. You can use this amount to pay for the education of your children after class 10 as well as for your own higher education.
You can withdraw money from your EPF account in order to meet the financial requirement for medical treatments. However, to do so, the following conditions must be met:
You can withdraw this money at any time during your service period. For this, you do not need to complete a number of years of service in your present organisation. The maximum amount that you can withdraw is your six months’ salary. This amount can be used for your and your immediate family member’s treatment.
You can withdraw an amount equivalent to 36 times your monthly salary from your EPF to repay your existing home loan. However, you will have to complete ten years of service. Note, you can only avail this advantage once in your lifetime.
The amount can be used to repay your present home loan or purchase a property or house. In order to avail the loan, the house must be in your or your spouse’s name or jointly held. This benefit cannot be availed if this is not the case.
You can opt to withdraw money from your EPF to meet the necessary expenses for a marriage. However, you can avail this benefit if you have completed seven years of your service life. Up to 50% of the amount you have contributed towards your EPF account, and the interest accumulated can be utilised for a maximum of three times. These are the instances when you can opt for these benefits:
If your home requires repairs or alterations or expansions, you can withdraw money from the EPF account. However some rules must followed to get the benefits:
If you want to construct a house or purchase a property, you can withdraw some money from your EPF account. The following rules require understanding before opting for the benefits:
No disputes must be there concerning the property in question. Further, you must provide proof of registration of the property to avail the benefits.
According to PF withdrawal rules 2023, specially-abled account holders are eligible to withdraw 6 months’ basic salary and dearness allowance or the employee’s share of contribution along with interest, whichever is lower, to pay for their equipment. This was done to ease the financial burdens of buying costly equipment.
Any PF account holder can withdraw 75% of the accumulated amount if they have been unemployed for more than a month after relinquishing employment. If the unemployment period exceeds 2 months, the remaining 25% can also be withdrawn.
Some other reasons for withdrawal might be:
For the members who have an EPF account and have linked their Aadhaar card details with the Universal Account Number (UAN) can avail PF withdrawals in three ways:
This type of PF settlement is done when you have reached retirement age and your service life has ended. If the account holder has passed away, the nominee would receive the payment.
This type of payment withdrawal takes place when you withdraw only a portion of the PF corpus so as to fulfil your financial requirement.
If you continuously provide your services to the organisation for 10 years, you are eligible to receive pension benefits after retirement.
The withdrawal types mentioned above are possible from the EPFO member portal with the attestation of their employer.
Follow these steps to withdraw PF:
Given below are the steps to withdraw funds from PF accounts online:
Step 2 – Enter your credentials
On your right, a sign-in box will appear. Enter your credentials like UAN and password. Input the given CAPTCHA and sign in
Step 3 – Verify the KYC details you entered
Click on the Manage section and verify your KYC details
Step 4 – Select the claim form
Find the “Online Services” section from the top menu bar. From here, select Claim (Form 31, 19 & 10C).
Step 5 – Enter code and verify
A screen displaying your details, including KYC and other details, will appear. Enter the last 4 digits of your account number and click “Verify”.
Click “Yes” to sign the undertaking certificate and proceed.
Step 6 – Proceed with the online claim
Under the “I want to apply for” section, eligible members will have to choose the type of EPF withdrawal. The list contains full EPF settlement, partial EPF withdrawal or pension withdrawal. If the service criteria make a member ineligible for a certain withdrawal, it will not appear in the dropdown list.
Step 7 – Select the option of PF Advance (Form 31)
Choose the purpose of your withdrawal from a dropdown menu. You also need to fill in the amount required and your address. This form will only appear if you are eligible for the particular withdrawal.
Tick on certification and submit your application
Step 8 – Submit photo and documents
The portal may ask you to submit scanned photos of your documents on the basis of your purpose for withdrawal
Once your employer approves your withdrawal request, the amount will be deducted from your EPF account. This deducted amount will get deposited to the account number you mentioned earlier in step 5.
To withdraw funds from PF accounts offline, visit your EPFO (Employees Provident Fund Organisation) and submit the Composite Claim Form which you need to fill up correctly.
Note that there are two types of Composite Claim Forms:
Check whether the form needs to be attested before you submit it to the respective EPFO office.
Listed below are the documents required for EPF withdrawal:
The amount that an employee contributes to EPF accounts is completely tax-free. But, there are certain EPF taxation rules people need to be aware of if they wish to withdraw funds before retirement.
This table illustrates the details of EPF taxation withdrawal rules:
|EPF Withdrawal||Taxation Rules|
|If an employee wishes to withdraw ₹50,000 before completing continuous 5 years of service||10% TDS will be applicable if PAN is there30% TDS + Tax will be applicable if PAN is not thereNo TDS will be deducted if Form 15G/ 15H is provided|
|If an employee withdraws funds from the EPF account after continuous 5 years of service.||No TDS will be applicable|
|If someone wishes to transfer funds from EPF to NPS (National Pension Scheme).||No TDS will be applicable|
Employees should also keep in mind the following points:
The primary purpose of the Provident Fund is to create a safety net for individuals after retirement. Every individual deserves to enjoy a post-retirement life with no financial burden. The EPFO sets various PF withdrawal rules for different purposes. But it is vital that you indulge in premature withdrawal only in case of emergencies. Saving up for retirement should remain the main objective.
In case your PF withdrawal application gets rejected, you can apply for an instant cash loan with Navi. It is 100% paperless and comes with flexible EMI options. Just download the Navi App and apply!
Section 80C of the Income Tax Act offers tax deductions of up to Rs. 1.5 lakh on contributions made to Provident Fund. However, only the employee’s contribution to PF is eligible for deductions. Thus, there is no tax benefit on the employer’s contribution.
If you are withdrawing your PF balance online, you do not have to ask or inform your employer. Earlier, you had to get your employer’s signature on Form 19. However, with the introduction of UAN-based Form 19, you can now submit all forms for PF withdrawal without the employer’s signature.
To download and print PF passbook online, you need to visit the member passbook page on EPFO’s official website. Upon logging in using your UAN and password, you can see a dropdown menu with all PF accounts linked with the UAN. Select the specific Member ID and click on ‘View Passbook.’ Lastly, you can scroll down to download or print the passbook.
Public Provident Fund and Employee Provident Fund are retirement schemes with the aim of ensuring income security after retirement. There are different rules in relation to EPF, as only salaried individuals can hold an account and have a lock-in period till retirement. Meanwhile, PPF is open for all and has a shorter lock-in period. Traditionally, the EPF interest rate is higher than PPF.
For the financial year 2020-21, the EPFO offered an 8.5% interest rate to its subscribers. Meanwhile, the interest rate on EPF contributions for FY 21-22 has been reduced to 8.1%, which is the lowest in over 4 decades.
Disclaimer: Mutual Fund investments are subject to market risks, read all scheme-related documents carefully.
This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
|Section 194IB||Section 44AA||Section 80E|
|Section 195||Section 80EEA||Section 80DD|
|Section 80CCC||Section 80GG||Section 80 G|
|Section 54F||Section 1941A||Section 10|
|Section 194Q||Section 192||Section 269SS|
|Section 80DDB||Section 44AD||Section 194C|
|Section 194A||Section 194H||Section 80D|
|Section 80C||Section 80C, 24(b), 80EE & 80EEA||Section 234A|
|Section 50C||Section 80C||Section 80EEA|
|Section 194B||Section 194J||Section 206C|
|Section 80CCG||Section 80 EEB||Section 24Q|
|Section 40b||Section 194C||Section 54EC|
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