From June to August 2020, the Government of India will pay the employer and employee contributions to employees' EPF accounts for extra three months. The incentive is available to businesses with up to 100 employees and 90% of those employees earning less than Rs 15,000 per month. Non-government organisations' EPF contributions have been lowered from 12% to 10%.
- EPF (Employees' Provident Fund), sometimes known as PF (Provident Fund), is mandated savings and retirement plan for eligible employees of a company. This fund is meant to be a savings account that employees can tap into when they retire. Employees are required to contribute 12% of their base income to the EPF monthly. The employer contributes an equal amount as well. The money you put into an EPF account earns interest every year.
- Once an employee retires, they can apply for EPf withdrawal. Premature epf withdrawal is possible if specific circumstances are met, as stated in this article.
EPF withdrawal Rules 2021
Employer and employee contributions are combined in the EPF account. Money in an EPF account, on the other hand, cannot be withdrawn at any time.
Here are ten crucial rules regarding epf withdrawal:
- Unlike a bank account, money from an EPF account cannot be withdrawn while employed. The Employees' Pension Fund (EPF) is a long-term retirement savings plan. Only after retirement can the funds be withdrawn.
- In the event of an emergency, such as a medical emergency, home acquisition or building, or higher education, partial withdrawals from EPF accounts are permissible. Partially withdrawing funds is subject to restrictions based on the cause. A partial withdrawal request can be made electronically by the account holder.
- Even though the EPF corpus can only be taken after retirement, early retirement is not considered until a person reaches the age of 55. If the person is not less than 54 years old, EPFO authorises a withdrawal of 90% of the EPF corpus one year before retirement.
- If a worker is laid off before retirement due to lock-down or retrenchment, the EPF corpus can be withdrawn.
- To withdraw funds from the EPF, the subscriber must declare unemployment.
- EPFO's new rule allows for the withdrawal of 75% of the EPF corpus after one month of unemployment. After finding new work, the remaining 25% can be transferred to a new EPF account.
- After two months of unemployment, the old rule allowed for a 100% Epf withdrawal.
- Withdrawals from an EPF account are tax-free, but only under specified circumstances. Only if an employee contributes to the EPF account for five years in a row is he or she eligible for a tax exemption on the EPF corpus. If there is a five-year hiatus in contributions to the EPF account, the sum is taxed. The entire EPF sum will be considered taxable income for that financial year in that event.
- When an EPF corpus is prematurely withdrawn, tax is deducted at the source. TDS, on the other hand, is not applied if the total amount is less than Rs.50,000. Keep in mind that if an employee submits their PAN with the application, the TDS rate is 10%. Otherwise, it'll be 30% + tax. Form 15H/15G is a declaration form that declares that a person's whole income is not taxable, avoiding TDS.
- Employees no longer have to wait for their employer's permission to withdraw their EPF funds. If the employee's UAN and Aadhaar are linked, and the employer has accepted it, it can be done directly through the EPFO. You may check your Epf withdrawal status online.
EPF withdrawal online procedure
You must ensure that your UAN is activated and linked to your KYC before withdrawing EPF online (Aadhaar, PAN and bank details). If you match these criteria, you can withdraw your EPF online by following the steps outlined below.
Step 1: Use your UAN and password to log in to the UAN Member Portal https://www.epfindia.gov.in/.
Step 2: Select ‘Claim (Form-31, 19 & 10C)' from the drop-down menu under the ‘Online Services' tab in the top menu bar.
Step 3: The screen will display the member's information. Click on ‘Verify‘ after entering the last four numbers of your bank account.
Step 4: To sign the certificate of the undertaking and continue, click 'Yes.'
Step 5: Now select ‘Proceed for Online Claim' from the drop-down menu.
Step 6: To withdraw your cash electronically, select ‘PF Advance (Form 31).'
Step 7: A new area of the form will appear, where you must choose the ‘Purpose for which advance is required,' the required amount, and the employee's address.
It's worth noting that all options for which the employee is ineligible will be highlighted in red.
Step 8: Check the box next to the certification and send in your application.
Step 9: Depending on the reason for filling out the form, you may be required to submit scanned documents.
Step 10: After your employer approves your withdrawal request, the funds will be removed from your EPF account and put into the bank account you specified when filling out the withdrawal form.
Your EPFO- registered cellphone number will receive an SMS notification. The money will be paid to your bank account once the claim is processed. Despite the EPFO's lack of a specific time limit, the money is normally credited within 15-20 days.
Tax on Epf withdrawal
Withdrawals from a PF account are tax-free up to a certain amount.
You can get tax breaks when you withdraw money from your PF account. This, however, only applies if you withdraw after providing 5 years of continuous service. It is also decided by the tax bracket in which you fall. Tax deducted at source (TDS) or tax will be imposed on your money if you remove your PF balance before the end of the 5 years.
However, in some cases, depending on the circumstances, no tax will be charged on Epf withdrawals made before the fifth year. They are as follows:
When you need to withdraw money for a medical emergency or an unavoidable health issue.
When the total amount of your PF is less than Rs.50,000.
When you use Form 15G or Form 15H to withdraw your PF balance (If you submit PAN, then there will be a TDS at 10 percent ).
When your PF amount is transferred from one PF account to another.
When the employer's business ceases to exist.
EPF withdrawal eligibility criteria
The prerequisites that an employee must meet to withdraw EPF funds are as follows:
Only after retirement may the complete sum from the EPF account be withdrawn. EPFO only considers early retirement if a person has reached the age of 55.
Only in the event of a medical emergency, home acquisition or building, or higher education is it possible to withdraw part of your EPF.
One year before retirement, EPFO permits a withdrawal of 90% of the sum.
If an employee is laid off or retrenchment occurs before retirement, the EPF corpus might be withdrawn.
After one month of unemployment, only 75% of the corpus can be withdrawn, according to the new law. After acquiring employment, the remaining funds will be transferred to a new EPF account.
Employees do not have to wait for their employer's permission to withdraw their EPF. They can receive approval online by linking their UAN and Aadhar to their EPF account.
You must have the following information when filing a claim online:
A UAN number that is currently in use.
Bank account information is connected to your UAN.
PAN and Aadhar numbers have been seeded into the EPF database.
EPF claim status
The procedure for checking the status of your EPf withdrawal claim is as follows.
Step 1: Visit the EPFO website https://www.epfindia.gov.in/. Click on 'Our Services,' then 'For Employees.'
Step 2: Select ‘Know Your Claim Status' from the drop-down menu.
Step 3: Fill in the captcha image and your UAN.
Step 4: Fill in the following information.
Input the current situation of your PF office.
From the drop-down option, choose your PF Office.
Enter your establishment code
Enter the account number for your Provident Fund.
Step 5: To check the progress of your PF claim, click the ‘Submit' option.
Frequently asked questions
What are the requirements for withdrawing EPF funds to pay down a home loan?
The primary condition for a member to withdraw EPF for house loan repayment is that he or she has worked for three years in a row. In addition, the maximum amount that can be taken out for this purpose is 90% of the EPF corpus.
Is it possible to claim EPF without using the EPF portal?
If you don't want to use the internet platform, you can fill out the Epf withdrawal form on paper. If you want to use the online option, go to the EPF member portal and log in with your UAN and password.
What are the restrictions on online Pf withdrawals in advance?
Members of the EPF can make advance withdrawals from their PF accounts for a limited number of reasons. The reasons for making an advance withdrawal online, as well as the number of times one can do so, are listed below:
There are only three occasions a Pf withdrawal can be used to support a wedding.
When a person withdraws their PF in advance to pursue post-secondary school, the same limit applies.
One can only make a one-time PF advance claim if they intend to utilise the money to buy a plot of land or build a house.
There is no absolute restriction on the number of withdrawals made from the PF before retirement to pay for any medical emergency or treatment for a catastrophic disease.
Is it necessary for individuals to submit Form 15G/H with their Epf withdrawal form?
EPF is tax-free only when it is withdrawn after five years of employment. If the withdrawal is done before completing a 5-year service tenure, this is not the case. The amount removed in the latter situation will be taxed. The Form 15G/H is used to prevent TDS from being deducted from an Epf withdrawal amount.
Is it necessary to provide your PAN number when withdrawing your EPF?
Individuals who want to make a partial withdrawal from their EPF account must give their PAN number. Failure to do so may result in a 30 percent or higher increase in TDS. If PAN is provided, however, the TDS rate will be 10%.
Why can't I take money out of my EPF account while I'm working?
EPFO is a long-term investment programme, which is the key rationale. It aids members in accumulating a retirement fund. As a result, it is illegal for anyone to withdraw their EPF balance while employed by a company or organisation.
Is it possible to make partial withdrawals from my PF account in the event of an emergency?
Yes, you can withdraw portions of your PF for emergency scenarios like medical needs, home building, educational obligations, and so on. The amount you can withdraw in part will be determined by your cause. You must satisfy a certain minimum service limit to be eligible for a partial withdrawal.
What is the most recent information about Pf withdrawal when a person loses his or her job?
Individuals who have been fired from their employment will be able to withdraw 75 percent of their accrued corpus, according to the latest EPFO regulations. This can be done one month after they've been terminated. Previously, withdrawals after one month were not authorised. If an individual remains unemployed for two months, he or she will be able to withdraw the remaining 25% and entirely pay the PF amount.
Is it possible to take my entire PF balance before I retire?
Only after you retire may you withdraw your entire PF balance. Only once you reach the age of 55 will you be able to retire. You will not be able to get your complete pension if you retire before reaching this age. However, one year before you retire, you are entitled to receive 90% of your EPF corpus. You should keep in mind that your age cannot be less than 54.
Is it true that Epf withdrawals are tax-free?
If you have worked for an establishment for 5 years and have a PF account, you may be eligible for a tax exemption on your Epf withdrawal. If you leave before completing 5 years of continuous service, you will be obligated to pay taxes on the sum you left.
Do I need permission from my employer to withdraw my EPF funds?
No, you do not need to acquire your employer's permission to withdraw your EPF funds. You can start the withdrawal process right away with the EPFO. Your Aadhaar and UAN, on the other hand, must be linked, and your employer must approve it. The EPFO member will get funds directly from the EPFO once the Aadhaar and UAN have been correctly confirmed.