Overview about EPF & EPFO
Established in the year 1952 by the Government of India, the Employees Provident Fund Organization was set up to help citizens save for their retirement or for their future needs. The EPF (Employees’ Provident Fund) is controlled by the Ministry of Labor and Employment, Government of India, and in 2013, the EPFO launched its own portal enabling subscribers to carry out all EPF processes such as - checking the status of their PF account , making withdrawals (partial or complete), taking a loan against their PF corpus, transferring their balance from one PF account to another, etc. The EPFO has also launched the UAN (Universal Account Number) which has enabled subscribers to merge multiple PF accounts as well as make withdrawals from their account without the attestation of their employer - provided that they have seeded their Aadhaar card details with their UAN.
Types of PF Withdrawals
Subscribers can make three different types of PF withdrawals on the EPFO member portal. They are:
- PF final settlement
- PF partial withdrawal
- Pension withdrawal benefit
Subscribers can make the above listed withdrawals on the EPFO member portal with the attestation of their employer if they have seeded their Aadhaar card details with their UAN.
Latest PF Withdrawal Rules 2017-2018
In order to ensure that employees continue to be enrolled in the scheme and avoid making withdrawals from their PF corpus and instead save it for the future or for retirement.
EPFO has listed a number of PF withdrawal rules. They are as follows.
- All withdrawals made before completion of 5 years of continuous service are subject to tax. Withdrawals after completion of 5 years of continuous service in the EPF are tax free.
- If in case the employee was terminated or is unemployed as a result of ill-health and so on, withdrawals will not attract tax.
- If the employee makes a withdrawal before the completion of 5 continuous years in the scheme, the principal amount as well as the interest accrued is subject to tax. That said, the amount will be taxable in the current financial year.
- For withdrawals before completion of 5 continuous years towards the scheme, the employee will be taxed 30% of the principal amount and the interest accrued if he/she has not submitted their PAN to the EPFO authorities. If the employee has submitted his/her PAN details to the EPFO authorities, 10% TDS (tax deducted from source) will be applicable.
- Funds transferred from one’s PF account towards the National Pension Scheme (NPS) will not attract tax when one makes a withdrawal.
- If the employee shifts jobs and in the process has different PF account, it will be considered as continuous service to the scheme provided there has been no gap in contributions.
- Employees have to facilitate the use of the Composite Claims Form to make a partial withdrawal or a final settlement claim.
- If the employee has seeded his/her Aadhaar card details with their UAN, they can submit the Composite Claims Form to make a withdrawal directly to the EPFO without the requirement of the attestation of their employer. Those who have not seeded their Aadhaar card details with their UAN have to submit the Composite Claims Form with the attestation of their employer to make a withdrawal.
10 important things to know about the new EPF Withdrawal Rules 2018
The Employees' Provident Fund Organisation (EPFO) made an amendment to the EPF withdrawal rule in the year 2018. This amendment makes EPF withdrawal easier as the waiting period for withdrawal is shorter now. The EPF account consists of contributions from the employer and employee. However, the money in an EPF account cannot be withdrawn at whim.
Here are 10 important rules about EPF withdrawal:
- Money from the EPF account cannot be withdrawn during employment, unlike a bank account. EPF is a long-term retirement savings scheme. The money can be withdrawn only after retirement.
- Partial withdrawal from EPF accounts is permitted in the case of an emergency such as medical emergency, house purchase or construction, and higher education. Partial withdrawal is subject to limits depending on the reason. The account holder can request online for partial withdrawal.
- Although the EPF corpus can be withdrawn only after retirement, early retirement is not considered until the person reaches 55 years of age. EPFO allows withdrawal of 90% of the EPF corpus 1 year before retirement, provided the person is not less than 54 years old.
- The EPF corpus can be withdrawn if a person faces unemployment before retirement due to lock-down or retrenchment.
- The EPF subscriber has to declare unemployment in order to withdraw the EPF amount.
- As per the new rule, EPFO allows withdrawal of 75% of the EPF corpus after 1 month of unemployment. The remaining 25% can be transferred to a new EPF account after gaining new employment.
- As per the old rule, 100% EPF withdrawal is allowed after 2 months of unemployment.
- EPF corpus withdrawal is exempted from tax but under certain conditions. Tax exemption on EPF corpus is permitted only if an employee contributes to the EPF account for 5 continuous years. The EPF amount is taxable if there is a break in the contribution to the account for 5 continuous years. In that case, the entire EPF amount will be considered as taxable income for that financial year.
- Tax is deducted at source on premature withdrawal of the EPF corpus. However, if the entire amount is less than Rs.50,000, then TDS is not applicable. Keep in mind, if an employee provides PAN with the application, the applicable TDS rate is 10%. Otherwise, it is 30% plus tax. Form 15H/15G is a declaration form, which states that a person's total income is not taxable and thus, TDS is avoidable.
- An employee does not have to await approval from the employer for EPF withdrawal anymore. It can be done directly from the EPFO, provided the employee's UAN and Aadhaar are linked, and the employer has approved it. EPF withdrawal status can be checked online.
PF Balance Withdrawal Procedure
With the amendments made by the Employees’ Provident Fund Organization (EPFO), now subscribers to the scheme do not require the attestation of their employer to make a partial or complete withdrawal. All that the subscriber has to ensure is that his/her UAN is seeded with their Aadhaar card details. The EPFO has also rolled out the Composite Claims Form, which can be used to request for a partial or complete withdrawal. Subscribers can carry out the whole process of making a withdrawal online either on the EPFO member portal or on the UAN portal.
PF Withdrawal Claim Forms
The PF Withdrawal Claim Forms that need to be submitted to withdraw the provident fund or pension fund vary based on the age, reason for making the claim, and whether or not the employee is still in service. Earlier, Form 19, Form 31 , and Form 10C were used to make withdrawals. But recently, a composite claim form has replaced the above-mentioned forms. The forms that required the UAN details of the employee have now been replaced with a composite claim form that requires the Aadhaar details of the employee.
As mentioned earlier, the claim form that needs to be submitted varies based on certain criteria.
When an employee is still under service:
- If he/she wishes to take an advance from the PF account, the composite claim form (Aadhar/Non-Aadhar) has to be submitted.
- If he/she wishes to finance his/her LIC policy through the PF account, Form 14 has to be applied.
- If he/she has crossed 58 years of age and wishes to claim the pension fund.
- Form 10D should be applied for a monthly pension if 10 years of eligible service has been completed.
- The composite claim form (Aadhar/Non-Aadhar) should be submitted if 10 years of eligible service has not been completed.
When an employee switches the job
- And wishes to transfer the account, Form 13 should be applied.
- When an employee leaves an establishment and doesn’t join another
- He/she can make a PF and pension fund claim using the composite claim form (Aadhar/Non-Aadhar).
- Is above the age of 58, and has completed 10 years of eligible service, he/she can make a PF claim using the composite claim form (Aadhar/Non-Aadhar) and a pension claim using Form 10D.
When an employee leaves an establishment due to a physical disability
- He/she can make a PF claim using composite claim form (Aadhar/Non-Aadhar).
- He/she can make a pension claim using Form 10D.
- Is above the age of 58 and has not completed 10 years of eligible service, he/she can make the PF and pension claim using the composite claim form (Aadhar/Non-Aadhar).
When an employee is deceased while in service
- Before the age of 58 while still in service, the nominee/heir/beneficiary can apply for the PF settlement using Form 20, monthly pension using Form 10D, and EDLI (Employees’ Deposit Linked Insurance) amount using Form 5IF.
- After the age of 58 and had completed 10 years of eligible service, the nominee/heir/beneficiary can claim the PF using Form 20, the pension using Form 10D, and the EDLI amount using Form 5IF.
- After the age of 58 and had not completed 10 years of eligible service, the nominee/heir/beneficiary can make the PF settlement using Form 20, withdraw the pension using the composite claim form (Aadhar/Non-Aadhar), and claim the EDLI amount using Form 5IF.
When an employee is deceased
- Before the age of 58, the nominee/heir/beneficiary may claim the PF amount through Form 20, and pension amount through Form 10D.
- After the age of 58 and had completed 10 years of eligible service, the nominee/heir/beneficiary can claim the PF amount using Form 20, and the pension amount using Form 10D.
- After the age of 58 and had not completed 10 years of eligible service at the age of 58, the nominee, heir or beneficiary can apply for a final PF settlement using Form 20 and for the pension fund using the composite claim form (Aadhar/Non-Aadhar).
Reasons for PF withdrawal:
Subscribers can make a complete or partial withdrawal under the following circumstances:
- If the member has reached the age of retirement.
- If he/she needs to fund their house construction or pay their home loan.
- To cover medical expenses.
- To cover wedding or education expenses.
- If they have been unemployed for a duration of more than 60 days or two months.
- If they wish to move permanently abroad.
- If a female employee is resigning due to reasons such as pregnancy, childbirth, getting married, etc.
Limits of EPF Partial Withdrawal:
Employees can make withdrawals based on the below listed circumstances. Listed below is the withdrawal purpose, the minimum service requirement to be eligible to make the withdrawal, the PF withdrawal limit and the relations for who the employee can make the withdrawal.
|PF withdrawal reason||Minimum service||PF Withdrawal Limit||Relations|
|House Construction or purchase of plot||3 years||90% of PF balance||The PF account holder and spouse or joint|
|Home Loan Repayment||3 years||90% of PF balance||The PF account holder and spouse or joint|
|House renovation or alteration||5 years from completion of house||12 times of the basic salary or employee share with interest (whichever is lower)||The PF account holder and spouse or joint|
|Marriage||7 years||50% of PF balance||The PF account holder, siblings and children|
|Medical treatment||Not required||6 times of his or her monthly salary or total corpus (whichever is lower)||The PF account holder, parents, spouse or children.|
Requirements for PF Withdrawal:
To ensure the process of making a withdrawal is seamless, subscribers have to meet the below listed requirements if they wish to carry out a withdrawal without the attestation of their employer.
- Subscribers have to ensure that their UAN is active and their mobile number is seeded with their PF account.
- The PF member should also seed his/her Aadhaar card details with their PF account.
- The member’s bank account details and the bank’s IFSC code has to be integrated as well.
- For final settlements prior to completion of 5 years in the EPF scheme, the member will be required to seed his/her PAN details.
Check out for more about PF Withdrawal Guidelines
Apply EPF Balance Withdrawal Online(EPFO Portal)
Employees can make a PF withdrawal claim on the EPFO member portal by following the steps mentioned below. As already mentioned, if the employee has seeded his/her Aadhaar card details with one’s UAN account, they do not require the attestation of their employer to make a PF withdrawal.
- Visit the EPFO member portal.
- Login using your UAN and password, or registered mobile number, or Aadhaar card details, etc.
- Choose the “for employees” tab.
- Click on the “manage” tab and check your KYC details to ensure they are correct.
- Click on the “Online service” tab to proceed with the withdrawal if all the KYC details are correct.
- Choose “claim” from the drop down menu.
- Select the “proceed for claim” tab on the claim screen that includes one’s KYC and PF details.
- On the “I want to apply for” option, choose the type of withdrawal you wish to make -final settlement, partial withdrawal, pension withdrawal, etc.
- Once you select the type of claim you wish to make, fill in the composite claims form and authenticate using your Aadhaar card details.
- Enter the OTP sent to your registered mobile number.
- Once your claim for a withdrawal or final settlement has been made, you can check your claim status by clicking on the “track claim” tab.
Tax Free Limit for PF Withdrawals
In the case of partial withdrawals before completion of 5 continuous years towards the scheme, the employee will be taxed (TDS) 30% of the principal amount and the interest accrued if he/she has not submitted their PAN to the EPFO authorities. If the employee has submitted his/her PAN details to the EPFO authorities, 10% TDS (tax deducted from source) will be applicable. That said, if the total PF corpus is less than 30,000 when the employee is making the withdrawal, no tax will be applicable. In addition, no tax will be applicable if the employee wishes to make a withdrawal to cover medical expenses or if in case the employee was terminated or is unemployed as a result of ill-health, etc., or for transfer of one’s PF account.
PF Partial Withdrawal for Medical Purposes
An employee can make a tax-free withdrawal in the case of covering medical expenses either for himself/herself, parents, spouse, or children. With regard to withdrawal for medical purposes, employees do not need to serve a certain period in the scheme to avail a tax-free withdrawal. The EPFO also made an amendment to PF withdrawals for medical purposes, following which an employee does not need to submit a medical certificate when making a withdrawal claim for medical reasons. Now, only self-declaration form along with the Composite Claims Form (for partial and complete withdrawals) has to be submitted to make a withdrawal claim for medical purposes.
Online Grievances Portal for PF Withdrawal
The Consumer Protection Act encompasses a detailed procedure to resolve various grievances of EPF account holders. An individual or member can log on to the official website of EPFO and click the tab ‘register grievance’. A member can register all kinds of grievances vis-a-vis withdrawal of EPF account, insurance benefit (payment), scheme certificate, transfer of the account, cheque misplacement and PF balance issuance among others.
PF Withdrawal Online
All cumbersome paperwork related to withdrawal of EPF account may be a thing of the past. EPFO aims to launch an online facility for PF withdrawal in 2016. EPFO, which currently has over five crore members, is planning to settle PF claims in three hours after receipt of a withdrawal application (online application will be transferred to the bank accounts of subscribers). To the end, EPFO has become UIDAI’s registrar. While around 92 lakh subscribers provided their Aadhaar numbers, EPFO verified around 64 lakh numbers so far (as of October 2015) for linking it with UANs.
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