Employees' Provident Fund (EPF), is a mandatory savings and retirement scheme for eligible employees. Employees can rely on the fund's corpus after they retire.
Employees must contribute 12% of their basic pay to this fund each month, according to EPF rules. The employer matches the employee's contribution to the PF account. Annual interest is paid on funds deposited in EPF accounts.
Employees who retire can withdraw the entire amount accumulated in their EPF. However, this article explains how to make premature withdrawals from an EPF account if certain conditions are met.
Types of PF Withdrawals
- On the EPFO member portal, subscribers can make three types of PF withdrawals. They are as follows:
- Final PF settlement
- Partial PF withdrawal
- Benefit from pension withdrawal
Subscribers who have seeded their Aadhaar card details with their UAN can make the above-mentioned withdrawals on the EPFO member portal with the attestation of their employer.
PF Withdrawal Rules
EPFO has listed a number of PF withdrawal rules in order to ensure that employees continue to be enrolled in the scheme and avoid making withdrawals from their PF corpus in order to save it for the future or for retirement.
These are the following:
- All withdrawals made before completing 5 years of continuous service are taxed. Withdrawals from the EPF after 5 years of continuous service are tax-free.
- Withdrawals will not be taxed if the employee was terminated or is unemployed due to illness, for example.
- If the employee withdraws before completing 5 continuous years in the scheme, the principal amount as well as the interest earned is taxed. Nonetheless, the amount will be taxable in the current fiscal year.
- If an employee withdraws from the scheme before completing 5 continuous years, he or she will be taxed 30% of the principal amount and interest accrued if their PAN has not been submitted to the EPFO authorities. If the employee has provided the EPFO with his or her PAN number, 10% TDS (tax deducted at source) will apply.
- Transferred funds from a PF account to the National Pension Scheme (NPS) will not be taxed when withdrawn.
- If an employee changes jobs and opens a new PF account, it will be considered continuous service to the scheme as long as there is no gap in contributions.
- Employees must make it easier for customers to use the Composite Claims Form to make a partial withdrawal or a final settlement claim.
- If the employee has linked his or her Aadhaar card to their UAN, they can use the Composite Claims Form to make a withdrawal directly to the EPFO without the need for employer attestation. Those who have not seeded their Aadhaar card details with their UAN must submit the Composite Claims Form along with their employer's attestation to make a withdrawal.
Procedure for PF Withdrawal
Because of EPFO changes, subscribers to the Employees' Provident Fund Organization (EPFO) plan no longer need their employer's permission to make partial or entire withdrawals. All the subscriber has to do is ensure that their UAN is seeded with the information from their Aadhaar card. Furthermore, the EPFO has made available the Composite Claims Form, which can be used to request a partial or total withdrawal. Subscribers can complete the withdrawal process entirely online, either through the EPFO member portal or the UAN website.
Requirements for PF Withdrawal
- To ensure a smooth withdrawal process, subscribers must meet the requirements listed below if they wish to carry out a withdrawal without the attestation of their employer.
- Subscribers must ensure that their UAN is active and that their mobile phone number is linked to their PF account.
- The PF member should also link his or her Aadhaar card to their PF account.
- The member's bank account information, as well as the bank's IFSC code, must be included.
- The member will be required to seed his/her PAN details for final settlements prior to the completion of 5 years in the EPF scheme.
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