EPF withdrawal rules: EPF or Employment Provident Funds is a fund where the employees contribute a small part of their basic pay every month. The same amount of money is contributed every month by the employer as well for the same employee. The contributions from both the employee and the employer are then joined in the fund to make them act as a retirement fund for the employee. The fund is managed by EPFO or Employee Provident Fund Organization, which covers all the organizations having more than 20 employees.
Every employee coming under the EPF has a Unique Account Number or UAN number, which is unique for each PF account. You can use this UAN number to log in to the EPFO website and check the amount that you have in your PF account. Although the PF money is meant to be withdrawn after retirement, you can also withdraw the money prior to your retirement when required. However, you need to follow some rules before you can withdraw the PF money.
Before going to the EPF withdrawal rules, you first need to know some things about EPF and the types of EPF withdrawals.
EPF contributions and types of withdrawals
The employer pays a contribution of money equal to the 12% of the basic wage plus retaining allowance plus dearness allowance towards the PF of an employee. The same goes for the Employee, they also need to contribute the same amount towards EPF. However, if an organization has less than 20 employees, the contribution from the employee and the employer is different. In these cases, both the employee and the employer have to contribute 10% instead of 12% for the PF.
Now that you know the amount of contribution that you need to do towards your PF account, you must know the types of PF withdrawal. Basically, there are three types of EPF withdrawals to withdraw PF money.
- PF partial settlement – It’s when you need to withdraw a partial amount of money from the total EPF. This can be done while you’re still working.
- PF final settlement – This is when you withdraw all the money that you have in your PF.
- Pension withdrawal benefit – This is the benefit that you receive after you retire from your job. It helps you receive the PF amount as pension every month after you retire.
Now that you know the types of withdrawals, it’s time for you to know the rules for PF withdrawal.
Latest EPF withdrawal rules
In order to keep the employees enrolled in the PF scheme and stop them from making unnecessary PF withdrawals, EPFO has made a number of PF withdrawal rules. Here are all the new EPF withdraw rules that you need to know:
- According to the new rules by the EPFO, an employee can withdraw his/her EPF savings if he/she is unemployed for a span of 2 months.
- All the withdrawals made after contributing to the EPF account for more than 5 years is subjected to no income tax. However, if you tend to withdraw money from the PF account before 5 years of starting the PF account then you need to pay income tax on the amount you withdraw.
- In case of an employee working with multiple employers, if the PF is transferred to the new employer then it’s considered to continuous employment.
- If in case an employee is terminated by the employer because of reasons beyond the employee’s control, like health issues, then the PF withdrawal is not taxed.
- Once an employee withdraws the PF money before completion of 5 years towards the scheme, the amount will be taxable for the same financial year.
- All the employees must use the Composite Claims Form when they need to make a partial PF withdraw or even a final settlement claim.
- Once the PF is transferred towards the National Pension Scheme, it will not attract any tax when you withdraw it.
- If the employee applying for the withdrawal has linked his/her Aadhaar card with the UAN number, then he/she can submit the Composite Claim FOrm directly to the EPFO without needing to attest the form from the employer.
EPF withdrawal process
Now that you know about the EPF withdrawal rules, you might look out for ways how you can withdraw PF money. Worry not, We’ve got you covered.
Reasons that can lead to PF withdrawal
Employees can make a partial or complete withdrawal under some specific circumstances that are listed below:
- When the employee reaches the age of retirement or when the employee retires.
- If the employee needs money to cover the expenses for his/her wedding or education.
- For the repayment of a loan or construct a house.
- If any employee plans to move abroad permanently.
- In case, if an employee is resigning or has been terminated for reasons beyond his/her control.
Things required for EPF withdrawal
If you want to make PF withdrawal, there are some things that are required to make the process hassle-free. Here are the things that are required:
- You need to ensure that your UAN is active and is linked to your mobile number.
- Your Aadhaar number is linked to your PF account.
- Also, your bank account and the IFSC code are linked to the PF account.
- If you need to do final settlements before 5 years of continuation of the scheme, you need to seed your PAN details in the PF account as well.
How to withdraw EPF balance online?
Once you’re ready with all the required things, you can make a PF withdrawal claim citing proper reasons online. Here are the steps that you need to follow to do the same:
- Visit the EPFO portal for the members.
- Now, login to the member portal using your UAN number and the password, or Aadhaar card details, or even your registered mobile number.
- Now find and click on the for employees tab.
- Once you’re done click on manage and check the KYC details that are shown to you.
- Now click on the online services tab to proceed.
- Once done click on claim.
- Then select proceed for claim on the screen that has your KYC and PF details.
- Now you’ll see the I want to apply for option. On the option choose the PF withdrawal type.
- Once you select the type of PF withdrawal you want to make, fill the Composite Claim Form and authenticate it using Aadhaar card details.
- Now, you’ll get an OTP on your registered mobile number. Enter the OTP in the provided space.
- Once you complete all the processes, you can check the status of your claim by checking the Track claim tab present in the options.
How to withdraw EPF balance through an application?
Apart from the online method of withdrawing the PF balance, there’s an offline way of doing it as well. Here’s how you can do it:
- Download the new Composite Claim Form from the EPFO website.
- Fill the form manually.
- Once you fill the form submit it to the nearest EPFO office.
- Remember there are two Composite Claim Forms available, one for the people who have already linked their Aadhaar with their PF account, and the other for people who haven’t.
- If you haven’t liked Aadhaar to PF then you need to attest the Composite Claim Form from your employer.
- Once you submit the form, the process is done.
These are some of the ways how you can withdraw EPF money when you require. Now that you know the latest EPF withdrawal rules and the process to withdraw PF, comment below if you need any more information. Watch this space for updates on the EPF withdrawal rules and changes in it.
Also Read: A Guide to Open Your EPF Account Online