EPFO is the Employee’s Provident Fund Organisation that looks over the Provident Fund’s (PF) of all the employees and makes rules and regulations for the same. Provident Fund or Employees Provident Fund is a retirement scheme that saves a portion of your salary and the same amount is matched by your employer. This amount remains in this Fund and is given to you upon your retirement.
In this article, I’ll discuss what are the rules for withdrawing all of this money or a portion of it before your retirement. What will be the implications of this afterward and so on?
Situation 1: Complete EPF Withdrawal Of Money From Your EPF Account
You are allowed to withdraw your PF account only when:
- If you are jobless. OR
- 2 months or more have elapsed since your last employment.
Important thing to remember
Withdrawing money from your PF account when you are about to switch between jobs is illegal. Occasionally, people often fear a tedious claims process when they are leaving an organization. Therefore, they tend to withdraw all of their amounts from the PF. This is illegal and, from an investment point of view, very wrong.
When you withdraw all the amount, you will not be able to take advantage of its savings benefits, tax-free interest, and many such facilities. So, instead of withdrawing your money, you should simply transfer your PF account. With the introduction of UAN, this process has become very simple.
Situation 2: Partial Amount Is Withdrawn From Your EPF Account
A salaried employee is allowed to withdraw money from his/her EPF account for many purposes. But such withdrawals are subjected to certain rules and regulations, eligibility criteria, and conditions.
The reasons for which you can withdraw money from your EPF account, along with the rules are as follows:
- Withdrawal from PF account is allowed for yourself, siblings, and your children.
- For you to withdraw, you must have completed a minimum of 7 years of your service.
- In this case, you are allowed to withdraw a maximum of 50% of contribution 3 times in your career.
2] Medical Treatment
- You will be allowed to withdraw up to either 6 times of your monthly salary or the total amount for medical treatment.
- Such withdrawals are only allowed for self, parents, spouse, and your children.
3] For the Construction/Purchase of a Plot
- For you to withdraw from your EPF account for the construction/purchase of the plot, the property has to be registered in either your name, your spouse’s name, or to be jointly held.
- For such purchase, you are allowed to withdraw an amount that is 24 times your salary.
- For the construction purpose, you are allowed to withdraw an amount that is 36 times your salary.
- For you to be eligible for this withdrawal, you must have completed a minimum of 5 years of your service.
- You are allowed to withdraw for such a purpose only once in your entire career.
4] For Home Loan Repayment
- If you want to withdraw an amount from your EPF account for the purpose of home loan repayment, the property has to be registered in either your name, your spouse’s name, or to be jointly held.
- For you to be eligible for this withdrawal, you must have completed a minimum of 10 years of service.
- You are allowed to withdraw for such a purpose only up to 36 times your salary.
5] For House Renovation/Alteration
- In case you want to withdraw from your EPF account for the purpose of house renovation or alteration, the property has to be registered in either your name, your spouse’s name, or to be jointly held.
- For you to be eligible for this withdrawal, you must have completed a minimum of 5 years of service.
- You are allowed to withdraw for such a purpose only up to 12 times your monthly salary.
6] At the time of Retirement
- For the withdrawal of partial amount from the PF account, you should be minimum of 54 years old.
- You are allowed to withdraw 90% of the whole amount from your PF account.
7] Varied Reasons
There are other reasons for which you are allowed to withdraw from your EPF account. These are:
- If you are physically or mentally disabled and need to take a premature retirement.
- When you are switching to another job or searching for a job that is based abroad.
- When you leave our country and want to settle down in a foreign country.
Are There Any Taxation Rules In Regards To The Withdrawals From EPF Account?
- There won’t be any tax deduction on the withdrawal amount when the withdrawals are made after 5 years or more of continuous service.
- For the withdrawals that are made before the completion of 5 years of continuous service, the amount that is withdrawn will be taxable.
- PF withdrawals that are taxable will also attract TDS deduction at the rate of 10% (PAN card is registered) or a maximum of 30% (PAN card isn’t registered).
- TDS will not be deducted in case if the withdrawal amount is less than Rs.30,000.
- If your income is less than the basic exemption limit even when the provident fund withdrawal amount is added, you can submit a form 15G at the time of withdrawing the amount. In case you don’t submit your PAN card, then a TDS will be deducted at 34% from the total withdrawal amount.
- In case you are a senior citizen and do not want TDS deduction, then you will have to submit form 15H. Or you can submit form 15G for withdrawal amounts of up to Rs.3 lakh and Rs.2.5 lakh respectively. These forms are only applicable if your income is less than the taxable amount.
- TDS will not be deducted in cases such as –
- When the PF account is being transferred.
- When an employment contract is being terminated on the grounds of health reasons or if a business venture is discontinued by the employer.
- Any other reason that does not come in the domain of the employee.
Resolving Grievances Related To EPF Withdrawals Can Be Done
Grievances can be resolved online by as given below:
- Go to the EPF Grievance Management System website.
- You will see ‘REGISTER GRIEVANCE‘ option on the tab. Click on it.
- You will be redirected to a form. Fill this form with all the necessary details, and when finished, click on ‘Submit‘.
- You will also be able to check your claim status on its official website.
If you have any questions or suggestions, please leave a comment below.