The EPF amount could first withdrawn at the time of quitting your job, but the government now has a premature withdrawal cap. Employees will not be able to withdraw the entire money before the time of retirement.
PF Withdrawal Rules due to COVID-19
In order to help individuals during the lockdown because of the coronavirus outbreak, key decisions were made by the Government of India regarding the withdrawal of Provident Fund (PF). The announcement was made by the Finance Minister Nirmala Sitharaman on 26 March 2020.
As per the new guidelines, any individual who is facing financial difficulties due to the coronavirus outbreak can withdraw a certain portion of the funds available in the PF account. Up to 75% of the balance available or 3 months’ basic pay and Dearness Allowance (DA), whichever is lower, can be withdrawn. The withdrawal process can be completed on the official website of the Employees’ Provident Fund Organisation (EPFO). You will need to enter the Universal Account Number (UAN) and password to login to the account.
You might have to wait till you are 60 years to get 100% EPF corpus?
EPF or Employee’s Provident Fund is a savings scheme available to all salaried employees residing in India. It is more of a retirement saving scheme that helps employee build a retirement fund by investing a fraction of their salary in the account every month which can later be used in the time of retirement. EPF is mandatory for individuals earning a salary up to Rs.6500. Those earning more than Rs.6500 can contribute to the fund voluntarily. The fund is maintained by EPFO (Employee provident Fund Organisation). Both the employer and the employee contribute to the employee’s fund.
Get 60 years old to get 100% EPF corpus
When EPF was introduced, people used to withdraw their EPF amount when they leave or quit their job. But that scenario changed when PF transfer through UAN and TDS on EPF withdrawal was introduced. The government is working on EPF premature withdrawal cap. The EPFO has proposed that an employee should not get more that 75% of its corpus before the retirement. Employees take a non-refundable loan from the EPF corpus amount personal financial expenditures such as marriage, children’s education, home purchase and medical bill.
The main reason behind this move is the social security obligation. The government, came up with the EPF corpus to give social security in old age. But people tend to withdraw their EPF amount after every job switch thus leaving nothing for them at the age of retirement. The EPFO has sent its proposal to the labour ministry. After the approval from labour ministry this rule can be implemented immediately.
Features of EPF
Listed below are some of the important features of EPF
- It is available only to salaried employees
- A part of the employee’s salary is invested in the EPF account every month
- Employer’s contribution of 12% of basic salary is totally deposited in provident fund account whereas out of employee’s contribution of 12%, 3.67% is contributed to provident fund & 8.33% is deposited in Pension scheme.
- Employees also have the option of contributing more than 12% if they intend to
- The amount invested in an EPF is exempt from tax under Section 80C of the Income Tax Act.
- In EPF, the amount is paid at the time of retirement or resignation, whichever occurs earlier.
- The employee can check the amount invested in their EPF account online on the EPF India website with their Universal Account Number(UAN)
- Partial withdrawals allowed for specific expenses such as house construction, higher education, marriage, illness etc.