If employee withdraws his EPF money before completion of 5 years of service from the date of joining, then he shall be liable to pay tax on such withdrawal and employer also shall be liable to deduct TDS on such withdrawal, unless the conditions of exemptions available under the Income Tax Act and Employees’ Provident Fund Organization (EPFO) are satisfied.
Withdrawal of Employees’ Provident Fund (EPF) amount by employee before completion of 5 years of service from the date of joining will attract tax as per Income-tax Act, 2025 and also TDS (Tax Deducted at Source) unless exempt as per conditions mentioned under Income-tax Act, 2025 and Employees’ Provident Fund Organization (EPFO) rules.
Employees’ Provident Fund (EPF) is a long term retirement benefit but the same can be withdrawn in part in case of unemployment or other emergencies even before retirement. The amount of withdrawal is not restricted but the amount so withdrawn before completion of 5 years of service will be considered as part of income and tax thereon will be charged as per the provisions of Income-tax Act, 2025.
A withdrawal, including the interest amount, could attract tax and TDS if not covered under any of the exemptions as specified under the income tax and EPFO rules. The report was first carried by Mint.
EPF investments currently earn an interest rate of 8.25% on a monthly basis.
EPFO rules define when full withdrawal is allowed
What is Full EPF Withdrawal as per EPFO Rules.
As per EPFO rules, EPF in Full can be Withdrawn by Employee in following cases as specified by ClearTax.
Retirement after reaching 55 years of age
Withdrawal of up to 90% of EPF balance after he/she completes 54 years of age i.e. one year prior to retirement.
Employee is unemployed for only 1 month then he can withdraw 75% of his EPF account.
Full withdrawal of the EPF balance after the individual is unemployed for a period of two months.
Online withdrawal by EPFO is permitted without approval of employer in following cases.
Your Aadhaar number must be mapped to your Universal Account Number (UAN).
Employer verification requirements have been completed
The EPF is one of the largest retirement benefits systems in the country to help working people save enough for their old age by themselves or through their employers. Under the EPF scheme, both the employee and the employer every month put aside 12% of the employee’s basic salary and dearness allowance as their contribution to the fund.
The employer’s contribution to Employee’s Provident Fund (EPF) is credited to Employee’s Provident Fund (EPF) account and Employee’s Pension Scheme (EPS) account.
Early withdrawals may trigger tax liability
Any withdrawal from EPF prior to completion of 5 years of continuous service of employee (as specified under Rule 6 of Schedule XI of the Income-tax Act, 2025) shall attract tax.
The tax implications will however not apply in case the withdrawal is permissible under Exemptions notified by EPFO & Income Tax and are admissible.
Exemptions may apply in cases such as:
Termination due to ill health
Closure or discontinuation of the employer’s business
Circumstances beyond the employee’s control
Tax applicable on Early Withdrawal is available on income tax portal web site. The entire amount of withdrawal along with interest made by employee before completion of 5 years of service and not covered under exceptions in above para shall be taxable and TDS would be applicable on such payment.
All previous service will get counted even if EPF was transferred without any withdrawal.
Once the EPF transfer happens, the service of employee with previous employer(s) can also be counted to complete 5 years of service. No TDS will be deducted by employer on withdrawal of EPF balance (along with the interest accrued thereon), as mentioned by ClearTax in the above article.
TDS rules are mainly based on the amount of withdrawal and PAN details.
Tax deducted at source on EPF withdrawal is a function of the amount of withdrawal and the PAN details of the employee available with the employer.
According to ClearTax:
No TDS is deducted if EPF withdrawal amount is below ₹ 50,000.
10% TDS will be deducted from EPF withdrawal amount if it is above ₹ 50,000 and PAN details are available with employer.
TDS may also be applicable at a higher rate i.e. 20% if PAN details are not available with the employer.
Employees with total income below the taxable limit (i.e. below the threshold limit for taxation) can also have TDS not deducted on EPF withdrawal by filing the following forms:
Form 15G
Form 15H
In any case, Tax to be deducted can be exempted if these forms are submitted validly. In such cases, Tax shall not be deducted from EPF withdrawals even if amount of withdrawal from EPF is in excess of Rs. 50,000 and total of such taxpayer from all sources is in excess of taxable limit for such taxpayer.
Retirement savings remain central to EPF framework
Withdrawals from EPF under focus as salaried employees become more aware on tax, retirement and employment.
The EPF account of salaried employees is being taxed before retirement, due to frequent job changes, unemployment and urgent withdrawals from their EPF accounts.
Most tax experts today do not recommend the withdrawal of EPF savings, for the simple reason that not only do these grow due to interest but also due to compounding. And, savings that have remained in the account for more than 5 years are taxed in a very tax efficient manner.
Moreover, as noted before, workers can withdraw from their own EPF contributions in case they lose their job or are suffering from serious health issues or are facing other similar crises of larger magnitude where they need to withdraw huge sums of money for meeting urgent needs.
A salaried individual must know the service conditions, the time at which withdrawal can be taken and the documentary evidence required for tax purposes before withdrawing his/her EPF savings prematurely.
Employees’ Provident Fund (EPF) is a crucial retirement savings scheme, but withdrawals are subject to specific rules. Depending on retirement, unemployment, or emergencies like medical needs, marriage, or housing, employees can withdraw fully or partially. Tax implications vary based on service period, withdrawal reason, and fund type. Understanding EPF withdrawal rules helps avoid unnecessary TDS and plan finances effectively.
Tax Exempt Withdrawals
Withdrawal after 5 years.
For medical and other specified grounds (or).
Transfer of PF amount to NPS account.
No TDS if the amount withdrawn is less than Rs.50,000
Eligibility for EPF Withdrawal
An employee must fulfil the following conditions to withdraw the entire EPF funds:
The entire EPF amount can be withdrawn upon retirement. The retirement age fixed by the EPFO is 55 years.
An employee can withdraw 90% of the EPF funds one year before retirement after attaining 54 years.
An employee can withdraw 75% of the EPF amount after one month of unemployment. The remaining money will be transferred to the PF account of the new job.
An employee can withdraw the entire EPF amount after two months of unemployment.
EPF amount can be withdrawn without the employer’s consent by obtaining approval online when the Aadhar is linked with the UAN, and the employer has approved it.
Reasons for Partial Withdrawal of EPF
An employee can withdraw EPF partially for the following reasons upon fulfilment of certain conditions:
Medical purposes
Marriage
Education
Purchase of land or purchase/construction of house
Home loan repayment
House renovation
Tax on EPF Withdrawal
Your EPF payout has 3 components:
Your contribution/employee’s contribution
Interest on your/employee’s contribution
Employers contribution and interest on employer’s contribution
Your contribution/employee’s contribution – This is the amount contributed by you to your EPF. This portion of your withdrawal is not taxable.
Interest on your/employee’s contribution- This portion is taxed as income from other sources.
Employer’s contribution and interest on employer’s contribution – Employer’s contribution and interest on it is fully taxable. It is taxed under the head salary in your tax return. When TDS is deducted on it, you are likely to see an entry under salary TDS in your Form 26AS for it.
TDS on EPF withdrawal before 5 years
If you withdraw from EPF before completing 5 years of continuous service,the withdrawal amount is taxable. However, no TDS will be deducted when the amount is less than Rs.50,000. In calculating 5 years of service, your tenure with the previous employer is also included. If you transfer your EPF balance from the old employer to a new employer and your total employment is 5 years or more, no TDS is deducted. Do remember that you must calculate the exact 5 years, there is no grace if you are short by a few days.
Tax on EPF withdrawal by temporary employee
When you are hired for a temporary position or on contract for a certain period, you are not in the permanent rolls of the employer. Thus, the employer is not liable to contribute towards your EPF. However, you are brought on rolls by the employer after some time of your employment, and your employer begins your EPF contribution, but you resign after completing 5 years. In such a case, the period for calculating 5 years should be done from the date of joining as a permanent employee not from the date of hiring to the temporary position.
Tax on EPF withdrawal from an unrecognised EPF
A fund which is not approved by the Commissioner of Income Tax is considered an unrecognised provident fund. It may have been recognised by the commissioner of the provident fund or any other formal authority. But for a fund to enjoy the income tax benefits (where withdrawals are exempt from tax after 5 years), it must be approved by a Commissioner of Income Tax. If you are a member of the Unrecognised Provident Fund (URPF), your withdrawals are taxed whether or not you have completed 5 years of service.
Tax on EPF withdrawal after 5 years
The EPF withdrawal is exempt from tax when an employee withdraws the amount after 5 years of continuous service.
Rates of TDS
TDS is deducted @ 10% on EPF balance if withdrawn before 5 years of service, and the amount is above Rs.50,000. Remember to mention your PAN at the time of withdrawal. If PAN is not provided, TDS shall be deducted at the rate of 20%. You can submit Form 15G/Form 15H if the tax on your total income, including EPF withdrawal, is nil. TDS is not deducted if Form 15G/Form 15H is submitted.
Table on Taxability on Withdrawal of EPF
The following table will help you easily understand the taxability on withdrawal of EPF:
Sl No
Scenario
Taxability
1
Amount withdrawn is < Rs 50,000 before completion of 5 continuous years of service
No TDS. However, If the individual falls under the taxable bracket, the withdrawal amount is taxable
2
Amount withdrawn is > Rs 50,000 before completion of 5 years of continuous service
TDS @ 10% if PAN is furnished; No TDS in case Form 15G/15H is furnished
3
Withdrawal of EPF after 5 years of continuous service
No TDS. Further, the individual need not offer the same in the return of income as such withdrawal is exempt from tax.
4
Transfer of PF from one account to another upon a change of job
No TDS. Further, the individual need not offer the same in return of income as it is not taxable.
5
Before completion of 5 continuous years of service\if employment is terminated due to employee’s ill health\The business of the employer is discontinued\the reasons for withdrawal are beyond the employee’s control
No TDS. Further, the individual need not offer the same in the return of income as such withdrawal is exempt from tax
How to Avoid TDS on EPF Withdrawal?
Here are a few ways of avoiding TDS on EPF withdrawal:
When you change jobs, try not to withdraw the EPF amount and transfer it to the new account at your new company.
If you can defer withdrawing funds from your account for five years (continuous service with all employers), withdrawals thereafter will not attract any TDS.
If withdrawal amount is less than Rs 50,000, no TDS is deducted.
Frequently Asked Questions
1. What is the Employees’ Provident Fund (EPF)?
The Employees’ Provident Fund (EPF) is a retirement savings scheme designed to provide financial security to employees after retirement, funded by contributions from both the employer and the employee.
2. Who can withdraw from the EPF?
Any employee who has contributed to the EPF can withdraw their funds upon meeting specific eligibility criteria, such as retirement, unemployment, or medical emergencies.
3. What are the conditions for full EPF withdrawal?
Employees can withdraw the entire EPF amount upon retirement at the age of 55, after two months of unemployment, or under certain conditions for premature withdrawals.
4. Can I withdraw EPF for medical emergencies?
Yes, you can withdraw EPF partially for medical purposes, provided you fulfill the specified conditions.
5. What are the tax implications on EPF withdrawal?
The tax on EPF withdrawal depends on various factors such as the duration of service, the reason for withdrawal, and the amount withdrawn. Generally, withdrawals after 5 years of continuous service are tax-exempt, whereas withdrawals before 5 years may attract TDS.
6. How is TDS calculated on EPF withdrawals?
TDS is deducted at a rate of 10% if the amount withdrawn is greater than Rs. 50,000 and the employee’s PAN is furnished. If PAN is not provided, the TDS rate is 20%. Withdrawals below Rs. 50,000 do not attract TDS.
7. What if I withdraw my EPF after 5 years of service?
If you withdraw your EPF after completing 5 years of continuous service, you will not be subject to TDS, and the withdrawal is exempt from tax.
8. How can I avoid TDS on EPF withdrawal?
To avoid TDS, you can transfer your EPF balance to the new employer instead of withdrawing it, or ensure that your withdrawal amount is less than Rs. 50,000. Additionally, if you have not had any TDS liability, you can submit Form 15G/Form 15H.
The Employees’ Provident Fund Organization (EPFO) has rolled out some significant updates to the Employees’ Deposit Linked Insurance (EDLI) scheme. These changes were greenlit during the 237th meeting of the Central Board of Trustees (CBT), which was led by Union Labor Minister Mansukh Mandaviya.
So, what’s new?
The ministry announced that the CBT has approved a minimum death benefit for those who pass away within their first year of service. If an EPF member dies before completing a year of continuous service, their beneficiaries will receive a minimum life insurance payout of Rs 50,000.
Coverage even without contributions
Additionally, the CBT has approved benefits for members who die while still in service but after a period without contributions. Previously, if a member was considered out of service, they wouldn’t qualify for EDLI benefits. Now, if a member dies within six months of their last contribution and their name is still on the rolls, they will be eligible for EDLI benefits. This change is expected to help over 14,000 cases of such deaths annually.
Support even with job gaps
The CBT has also given the green light to a proposal that allows for service continuity under the scheme. Previously, if there was a gap of just one or two days (like weekends or holidays) between jobs, members would be denied the minimum EDLI benefit of Rs 2.5 lakh and a maximum of Rs 7 lakh because they hadn’t met the one-year continuous service requirement.
With the new changes, a break of up to two months between jobs will now count as continuous service, making people eligible for EDLI benefits. This update is likely to help over 1,000 families dealing with service-related deaths each year. Plus, it’s projected that these amendments will lead to more than 20,000 cases of service-related deaths receiving increased benefits under EDLI annually.
The Employees’ Provident Fund (EPF) withdrawal process has become significantly streamlined, especially with the online options. Here’s a breakdown of the general steps, keeping in mind that the EPFO is also working towards incorporating UPI based withdrawals.
Key Requirements Before Starting:
Active UAN (Universal Account Number): Your UAN should be active.
KYC Compliance: Your Aadhaar, PAN, and bank account details must be linked and verified with your UAN.
Withdrawal Conditions: EPF withdrawals are subject to specific conditions, such as retirement, unemployment, or certain emergencies.
UPI integration: The EPFO is in the process of implementing UPI based withdrawels, which would greatly speed up fund transfers. When this is fully implemented, the process will change somewhat.
Forms: The forms mentioned (Form-31, 19, 10C, and 10D) are used for various types of withdrawals and pension claims.
It’s always recommended to refer to the official EPFO website for the most up-to-date information and guidelines.
Changes in Taxation of Employee Provident Fund (EPF). Employee Provident Fund (EPF) was earlier not subject to tax and was tax-free in the hands of the employee.
When a contribution was made, the employee could claim an income tax deduction under section 80C of the Income Tax Act, 1961 against such contribution up to INR 1.5 lakhs.
Employee Provident Fund (EPF) was not subject to tax when
interest was declared on the accumulated balance
an amount was withdrawn from the fund provided all exemption criteria were met
However, the Employees’ Provident Fund Organisation has done away with a few of the above tax benefits by issuing the guidelines on imposing TDS (Tax deducted at source) on the interest earned via EPF account where the contribution exceeds INR 2.5 lakhs in a financial year.
On August 31, 2021, the CBDT (Central Board of Direct Taxes) reported that when the contribution to an employee’s provident fund exceeds INR 2.5 lakhs for the non-government employees and INR 5 lakhs for the government employees then the interest earned through these contributions would be subjected to TDS.
What does the new guideline say?
Effective last year (1 April 2022), any interest on an employee’s contribution to the fund not exceeding INR 2.5 lakhs in a financial year will be tax-free and interest earned on the contribution exceeding INR 2.5 lakhs will be taxable in the hands of the employees. This threshold of INR 2.5 lakhs was increased to INR 5 lakhs if the employer isn’t contributing towards fund.
Further, in addition to contributions made by an employer exceeding INR 7.5 lakhs per financial year which is taxable as perquisites, any interest earned from such excess contribution would be taxable in the hands of the employee and will be taxed accordingly as per the new rule.
Applicability of TDS Deduction on EPF Interest?
The new rule is applicable to all EPF subscribers. TDS is applicable in case of transfer claims, final settlement, transfer from exempted establishments to the EPFO, or vice versa. This would also apply in case of any transfer between trusts.
Subjected Rates for PF
TDS rate would depend on whether the provident fund account is linked to a PAN (Permanent account number). TDS would be deducted on interest earned at a rate of 10% for employees who have PAN and 20% for those who don’t have a PAN.
In case of the double taxation avoidance agreement (DTAA) has been entered into with the NRI’s working country, then the rate lower than 30% would apply, as per the provisions of Section 90 of the Income-Tax Act.
Is it applicable retrospectively?
No TDS would be applicable on the past accumulation till March 31, 2021. It would only apply to the contributions that are made from April 1, 2021, which is more than the threshold limit of INR 2.5 lakhs.
Example
Mr A is contributing INR 40,000 per month to the EPF.
The Employees’ Provident Fund Organization (EPFO), under the Ministry of Labour and Employment, Government of India, has announced a significant change vide circular No: WSU/E- 49885/1333 dated 28th May, 2024 regarding the mandatory uploading of cheque leaf images for claim processing. The Employees Provident Fund Organisation (EPF) has announced that it has relaxed the requirement of mandatory uploading of the image of cheque leaf, attested bank passbook for certain eligible cases.
EPFO eases the requirement to upload image of a cheque leaf and an attested bank passbook. This move will help to expedite the settlement of claims filed online and reduce the number of claims that are rejected.
Purpose:
This will help to expedite the settlement of claims filed online and reduce the number of claims that are rejected because the image of the cheque leaf/attested bank passbook was not uploaded when the claim was filed online.
Step 2: Satisfy oneself that KYC and service eligibility conditions as mentioned against his UAN are correct and complete.
Step 3: Select the relevant claim.
Step 4: Authenticate using OTP received against the mobile registered with UIDAI to complete the online claim submission.
“According to the EPFO circular dated May 28, 2024, “With a view to facilitate the speedy settlement of claims filed online and to reduce the rejection of claims due to the reason of non-uploading of the image of cheque leaf/ attested bank passbook while filing claims online, it has been decided with the approval of the CPFC to relax the requirement of mandatory uploading of the image of cheque leaf/ attested bank passbook for certain eligible cases based on certain validations which include Online Verification of the Bank KYC by concerned Bank/NPCI, Verification of Bank KYC by the employer using DSC, Seeded Aadhaar Number verified by UIDAI among others.”
In all such cases, the following message is displayed in the last part of the PDF of the claim.
This new relaxation has been deployed in the Field Office application on 09/05/2024 and an email notification on this had also been sent to all ZOs on 13/May/2024.
The claims being eligible for this relaxation would be soon color coded for ease of identification of such claims by the Dealing Hands to prevent any inadvertent returning of such claims due to the reason of NON uploading of the image of the cheque leaf/bank passbook, alone.
Disclaimer: Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.
As reported by the ET, one of the two main social security organization under the Government of India’s Ministry of Labour and Employment, The Employees’ Provident Fund Organisation (EPFO) has specified that the EPF account holders will be exempted from submitting a joint declaration form, a vital document requiring both employee and employer signatures.
In general, The Joint Declaration Form for the Employees’ Provident Fund Organisation (EPFO) is a document used to rectify or update details in an employee’s EPF (Employees’ Provident Fund) account. It typically requires the signatures of both the employee and the employer.
The form is necessary for various purposes such as correcting errors in personal information, updating nominee details, linking Aadhaar numbers, or rectifying discrepancies in the EPF account.
The EPFO has said: “All such cases where the employees had already contributed on pay more than the statutory limit and the employer had also paid administrative charges on such contribution made on pay more than the statutory limit but had left the employment or died till 31/10/2023.”
The EPFO will provide immediate relief to two categories of existing employees:
Employees who enlisted in the EPF scheme with a monthly basic salary of less than Rs 15,000 and persisted in contributing to the EPF account despite their basic salary surpassing Rs 15,000 per month eventually.
The second group comprises employees who initially joined with a basic salary below the statutory wage limit and changed jobs over time but neglected to submit the necessary forms.
The above views were shared by Radhika Viswanathan, serving as the Executive Director at Deloitte Haskins & Sells LLP with the Economic Times.
The Employees’ Provident Fund Organisation (EPFO) has said that certain EPF account holders will get relief from submitting a joint declaration form. The joint declaration form is a crucial document for all EPF members. It requires both employee and employer signatures. Submission to the Regional PF Commissioner is necessary for rectifying inaccurate details in the employee’s PF account.
In January this year, the EPFO issued a circular stating that employers and employees are required to submit this form jointly for contributing to the EPF account on a basic salary higher than the current statutory wage ceiling of Rs 15,000 per month.
In a recent notification, EPFO has said those EPF members who left employment or died before a specific date don’t have to submit the joint declaration forms.
The EPFO has said that the relief from submitting the joint application form applies to those employees who have paid more than the statutory limit but left employment or died “till October 31, 2023.
The EPFO has said: “All such cases where the employees had already contributed on pay more than statutory limit and the employer had also paid administrative charges on such contribution made on pay more than the statutory limit but had left the employment or died till 31/10/2023, it is deemed that such cases had been allowed for contributing on pay more than the statutory limit so as to avoid hassles for the concerned stakeholders.
Besides this, EPF members who are already contributing on pay more than the statutory wage limit (Rs 15,000 per month) and their employers are paying administrative charges on the higher contributions, will not have to file the joint declaration form immediately.
Radhika Viswanathan, Executive Director, Deloitte Haskins & Sells LLP, told the Economic Times: “The EPFO circular will provide immediate relief to two categories of existing employees — those who have joined the EPF scheme with basic salary below Rs 15,000 per mont) and continued to contribute to the EPF account even when the basic salary exceeded Rs 15,000 per month over time. The second category is those employees who joined with a basic salary below the statutory wage limit and switched jobs over time but forgot to submit the forms.
The EPFO subscribers who want to contribute more than the statutory limit must submit a joint request and permission under EPF Scheme, 1952, Paragraph 26(6). A format has been authorized by the CBT during the 234th Meeting, held on October 31, 2023, for this purpose.
New cases will be processed digitally using the authorized format to save time and paper usage.
The EPFO circular of January 30, 2024 states that in cases where the employer has paid administrative charges on an employee’s contribution to pay more than the statutory limit, and the employee had already paid more than the statutory limit but has left their position or passed away before October 31, 2023, it is assumed that the employee was permitted to contribute more than the statutory limit.
Existing members who are already contributing on pay more than the statutory limit, and their employers are also paying administrative charges on such contributions, do not need to file their joint requests immediately, specifically for cases under Para 26(6) of EPF Scheme, 1952.
Additionally, the joint request under Para 26(6) of the EPF scheme 1952 requires a joint option of employee and employer to be submitted for provident fund contribution on higher wages, as per the EPF Scheme 1952, Para 26(6).
Moreover, as per the Supreme Court’s order dated November 4, 2022, an employee is eligible for higher EPS pension under specific conditions related to retirement and EPF membership.
The Central Government had launched Employees’ Pension Scheme, 1995 in exercise of the powers conferred by Section 6A of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952). The EPS’95 scheme applies to all the employees of factories and other establishments to which the Employees Provident Funds and Miscellaneous Provisions Act, 1952 applies. Employee Pension Scheme (EPS) came into force on 16th November 1995.
The government has, for the first time, started providing a minimum pension of Rs 1,000 per month to the pensioners under EPS, 1995 from September 1, 2014 by providing additional budgetary support keeping the widespread demands although there is no provision in the Scheme for budgetary support
Eligibility Criteria:
He should be a member of EPFO.
For availing the pension benefits under the EPS 95 Pension scheme the employee must serve a minimum of 10 years in service.
The age of retirement is 58 years.
Member can also withdraw his/her EPS at a reduced rate from the age of 50 years
If an employee has completed less than 10 years of service. but more than 6 months’ service, then he/she can withdraw the EPS amount on being unemployed for more than two months
A member’s family also becomes eligible for Pension benefits in case of death of the member while in service.
Benefits:
1.EPFO has certain benefits, which are payable to orphans as per the EPS 95 scheme as mentioned below in brief.
Pension amount is 75 per cent of monthly widow pension, with minimum of Rs 750 per month, each for two orphans at a time
The pension will be paid till 25 years of age
The pension will be paid lifelong if the person is suffering from any disability
2. Benefit provided in case of death of an employee, who was a member of the scheme at the time of death – Benefit amount 20 times of the wages. Maximum benefit of 6 lakh.
3. Pension to nominee for entire life paid on death of member, in case there is no family, as defined under EPS’ 95.
4. In case a member is not able to remain in service for 10 years before attaining the age of 58 years, he can withdraw the complete sum at the age of 58 years. It is worth mentioning here that he will not get the monthly pension benefits after retirement.
5. Lifelong pension equal to monthly widow pension paid to dependent father or motheron death of member, provided there is no family or nominee of member.
Note: In case of any details and query, the EPFO members can login to the official website of EPFO at www.epfindia.gov.in
Latest News: The RSS-affiliate trade union BhartiyaMazdoorSangh has urged the government to increase the minimum pension under the Employees Pension Scheme, 1995 to Rs 5,000 a month and link the Ayushman Bharat medical schemes to all EPS-95 pensioners while exempting senior citizens from income tax. The current minimum monthly pension under the EPS 95 is Rs 1,000.
“Ayushman Bharat medical scheme should be extended all EPS 95 pensioners and any hike in minimum pension in EPS 95 should be universal hike to all 65 lakh pensioners,” it said.
How to Check Your EPS Amount
A member can check the amount accumulated in his Employees’ Pension Scheme (EPS) account in his EPF Passbook. The last column in the passbook shows the EPS contribution deposited by the employer every month in the account of the member. The passbook can be downloaded from the EPF Passbook portal after logging into the account using UAN and password.
How is EPS 95 Pension Calculated?
The monthly pension amount an employee receives depends on the pensionable service of the employee and pensionable salary.
Here is the formula for calculating any member employee’s monthly pension income:
Member’s Monthly Pension = (Pensionable salary x Pensionable Service)/70
Pensionable Salary
It is the average monthly salary that an employee receives in the last 60 months before they decide to exit the Employees’ Pension Scheme. This is as per the judgement of the Supreme Court on November 4th 2022. Earlier, it was the average monthly salary of the last 12 months of the employee’s participation in the scheme.
Pensionable Service
This refers to the total number of years for which contributions were made to the EPS account. According to the law, pensionable service must be rounded off to the nearest year. This means that in case you serve for 6 months or more, then it will be treated as a year. If it is less than 6 months, the year will not be counted. If you superannuate at the age of 58 years and have served for more than 20 years, then your service tenure will be increased by 2 years.
Employees who are eligible for EPS pension can avail a number of benefits. Let us take a look at them:
Pension From the Age of 58
An EPS member becomes eligible for a pension from the age of 58 as soon as they retire. However, to become eligible for getting a pension, they need to compulsorily contribute for 10 years before turning 58. After retirement, they will receive an EPS pension scheme certificate. This certificate is a must for filling up form 10D to withdraw monthly pension.
Pension in Case of Disability
In case a member of EPS becomes disabled completely as well as permanently, then they will receive a monthly pension. This is irrespective of whether they have served for the pensionable period or not. This member will receive a pension starting from the date of permanent disability and for their entire life.
The employer must deposit funds in this person’s EPS account for at least a month to become eligible for a pension. However, the employee will have to undergo a medical test to prove the fact that they are unfit for the job that they did before becoming disabled.
Pension in Case of Employee’s Death
An EPS member’s family will receive family pension benefits in case of death of the employee under 3 circumstances:
If a member completes 10 years of service and dies before the age of 58 years.
In case a member dies after they start receiving a monthly pension.
If a member dies while still serving and the employer has at least once deposited funds into their EPS account.
Withdrawal Facility Before Becoming Eligible for Monthly Pension
In case a member of EPS is unable to remain in service for 10 years due to some reason and reaches the age of 58, they can withdraw the entire some they have invested by filling up form 10C. However, in this case, they will not receive any monthly pension.
Disclaimer:Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.
Employees’ Provident Fund Organisation or EPFO, the nodal agency that monitors the Employees’ Provident Fund (EPF) contributions, allows the subscriber to make a partial withdrawal or ‘advance’ from the provident fund corpus under certain circumstances.
While it takes up to 10 days for money to be credited to the bank accounts of subscribers, there may be instances when claims are rejected. EPFO, through a recent video on their YouTube channel, recently shared reasons for rejections.
Understanding common rejection causes
Discrepancies in information
A significant cause for rejections arises from discrepancies between submitted claim details and EPFO records. Ensuring alignment in personal information like name, date of joining and leaving an organisation, bank account particulars, KYC records, and date of birth is crucial.
Incomplete documentation
Certain self-declaration forms are prerequisites for claims. Thoroughly reviewing these forms before submission is imperative to avoid rejections.
Name mismatches
Discrepancies between EPF records and Aadhaar details demand a joint declaration submission along with the claim for rectification.
Failure to update bank account numbers and IFSC codes on the EPFO portal can lead to rejections. Verifying and ensuring the accuracy of bank details is pivotal for successful settlements.
Member information accuracy
Verifying and correcting any disparities in member details compared to establishment records is essential to prevent rejections.
Signature clarity and document quality
Clear member signatures and legible cheque copies submitted during online claims are crucial. Unclear signatures or cheque copies could lead to claim rejections.
Incomplete KYC requirements
Incomplete or unverified KYC details are frequent causes for claim rejections. Ensuring thorough completion and verification of KYC information is necessary.
To enhance the chances of a successful EPF claim settlement, subscribers are encouraged to cross-verify and rectify any discrepancies in their information before initiating a claim.
Clear communication, accuracy in documentation, and thorough adherence to EPFO guidelines are pivotal for smoother claim processing.
Employee Provident Fund Organization (EPFO), one of the largest social security organisations in the world, is in charge of managing the welfare programme known as Employee Provident Fund (EPF). Employees should be informed of the tax regulations regarding investments, accruals, and EPF withdrawals.
the spokesperson said “Employee Provident Fund (EPF) is India’s most popular retirement financial planning and investment choice for individual taxpayers. EPF was earlier under the Exempt taxation framework, i.e., EPF was tax-free at:
Investment stage: When a contribution was made, one could claim a deduction under section 80C against the employee’s contribution upto INR 1.5 lakhs and the entire employer’s contribution upto 12% of PF salary was exempt without any ceiling
Accrual stage: When interest is declared on the accumulated balance
Maturity stage: When the amount is withdrawn from the fund subject to meeting exemption criteria
Employee’s contribution to the EPF account is allowed as a deduction under Section 80C but within the overall limit of INR 1.5 lakhs. There is no change in this provision.
Employer’s contribution to the EPF account of an employee is exempt upto 12% of the PF Salary. Effective 1 April 2020, any employer’s contribution to Provident Fund (PF), NPS and superannuation exceeding INR 7.5 lakhs per year is taxable as perquisites in the hands of the employee under the head ‘Income from Salary’.
EPF tax rule on accrual of interest
Effective 1 April 2022, any interest on an employee’s contribution to EPF upto INR 2.5 lakhs per year is tax-free and any interest earned on a contribution over and above INR 2.5 lakhs is taxable in the hands of the employees. The threshold of INR 2.5 lakhs is increased to INR 5 lakhs in case the employer is not contributing towards EPF.
As per the notification issued by the Income Tax department dated 31 August 2021, the Regional Provident Fund Commissioner (RPFC) will maintain the EPF balance of individuals in two separate accounts for taxation purposes. The contribution within the limit of INR 2.5lakhs/5lakhs in one account and the excess contribution along with the interest accrued on it shall be maintained in a separate taxable account. The RPFC shall deduct TDS on such interest paid on the account maintaining taxable contribution.
Further, in addition to the contribution made by the employer in excess of INR 7.5lakhs per year that is taxable as perquisites in the hands of employees, any interest, dividends, etc. earned from such excess contribution will be taxed as well in the hands of the employee.
No tax is required to be paid on the contribution amount and accumulated interest in case the accumulated balance in EPF is withdrawn after 5 years of continuous service.
However, in case the accumulated balance is withdrawn prior to the completion of 5 years of continuous service (allowed by the RPFC in case of prescribed circumstances), then the balance and interest won’t be fully exempted from tax. The tax on such withdrawal shall be calculated as follows:
a) Employer’s Contribution and Corresponding Interest
Employer’s contribution and interest on the same is fully taxable in the hands of the employee under the head ‘Income from salary’ in the individual’s Income Tax return.
b) Employee’s Contribution
In cases where deduction under Section 80C is claimed at the time of contributing, the amount of the employee’s contribution shall become taxable as ‘Income from Salary’. In other cases, the amount withdrawn from an employee’s contribution may not be taxable.
The RPFC shall deduct TDS at 10% on the total amount withdrawn (if more than INR 50,000) before the completion of 5 years of continuous service.
Impact and budget expectations
Despite the above changes, EPF still remains the most loved and sought-after retirement planning scheme for the majority of individual taxpayers. The above changes may not affect individuals who are earning a basic salary upto INR 20 lakhs and contributing 12% of their basic salary towards EPF. Most individuals in India fall under this category.
While it is expected that the above provisions on EPF taxation may not change in the 2023 Union Budget, there is an expectation that the limit of deduction available under Section 80C may be increased from the current limit of INR 1.5 lakhs.
What is Employee’s Provident Fund (EPF) and Employee’s Pension Scheme (EPS)
The employee provident fund (EPF) and employee pension schemes (EPS) are popular schemes by the Government of India that aim to promote savings for retirement in case of salaried individuals in the organized sector. Both the schemes are governed by the Employee’s Provident Fund Organisation (EPFO), and cover organizations where the number of employees exceeds 20.
For salaried employees earning salary up to INR 15,000, it is mandatory to contribute towards EPF and EPS and the other employees can opt for the contribution on a voluntary basis. The employee’s contribution is 12% of the basic salary and the dearness allowance and the entire contribution is allocated towards EPF. The employer makes a matching contribution, however, the employer’s contribution to the extent of 3.67% goes towards EPF and the remaining 8.33% is allocated towards EPS.
It is pertinent to note that in case of employees who have started employment after Sept. 1, 2014 with salary above INR 15,000 per month, contribution towards EPS is not applicable. Hence, in such cases, the entire amount of employer’s contribution is allocated towards EPF only.
Withdrawal Eligibility
EPF withdrawal
An employee is eligible to withdraw the 100 percent accumulated amount of EPF on attaining the age of 58 years or if he/she has been unemployed for a continuous period of more than two months.
In case an individual remains unemployed for one month, he/she can withdraw 75% of the accumulated amount of EPF and the balance 25% can be withdrawn if the individual remains unemployed for more than two months.
Partial withdrawal is also allowed during employment to meet specified purposes like marriage, children’s education, construction or purchase of a house, medical reasons, etc. within the prescribed limits.
EPS withdrawal
The eligibility to withdraw and the quantum of withdrawal of EPS depends upon the age of employee and the number of years of service. Below are the broad withdrawal rules in this regard:
When employee has completed less than 10 years of service
In this case, a lump sum withdrawal is permissible only when the individual has been unemployed for two months.
The amount that may be withdrawn before completion of 10 years is linked to the number of years of service and shall be calculated as specified in Table D of the EPS scheme. The lower the number of years of service, lesser would be the amount that would be returned to the individual.
Alternatively, in case the employee does not wish to withdraw the amount accumulated towards EPS, he/ she may also opt to receive a “scheme certificate”. In case an individual takes up employment at a later date, then the service as per scheme certificate would be applied to calculate the total service tenure and eligibility for pension disbursal.
When employee has attained 50 years of age and has completed 10 years of service
An early monthly pension is permissible after 50 years of age when an individual has completed 10 years of service and leaves employment. In such a case, the individual would be eligible to receive a reduced pension as per the slabs defined under the EPS scheme.
When employee has attained 58 years of age and has completed 10 years of service
In this case, the individual would be entitled to 100% of the eligible pension which would be paid on a monthly basis.
When employee has attained 58 years of age but has not completed 10 years of service
In this case, the individual would be eligible for proportionate withdrawal as per the EPS scheme, once he /she attains the age of 58 years.
The amount of money that will be returned will be based on the number of years of service and shall be calculated as specified in Table D of the EPS scheme. The individuals in this category are not eligible for monthly pension.
Withdrawal Process: Key Considerations for Approval
EPF or EPS withdrawal is facilitated online through the member e-SEWA portal of EPFO (https://unifiedportal-mem.epfindia.gov.in/memberinterface) or through the UMANG mobile app. Before applying for EPF/EPS withdrawal, the following points should be taken care of:
All the accounts from any previous employment are merged into one account.
The Universal Account Number (UAN) should be linked to the Aadhaar number. This is necessary for an online service facility on the member e-Sewa portal. In case the UAN and Aadhar are not linked, the member needs to visit the Regional Provident Fund Office to submit the withdrawal claim form, together with a copy of the canceled cheque and other required documents.
All the know your customer (KYC)- related formalities should be completed before placing the withdrawal request. Permanent account number (PAN) is a mandatory requirement for KYC. The employee’s personal information as per the EPF records like date of birth, father’s name, etc. should be aligned with the proof of identity.
Process to Withdraw EPF/ EPS
After logging in the member e-seva portal, employees can select the ‘Online Services’ tab in the menu. The EPFO has launched a composite form i.e. one single form that can be selected for all categories of withdrawal for EPF or EPS.
Based on the type of withdrawal, employee can select the applicable Form number to submit the withdrawal claim i.e.
Form 19 for final EPF settlement; or
Form 31 for PF advance; or
Form 10C for withdrawal of accumulated pension contribution before completing 10 years of service; or
Form 10D in case of monthly pension withdrawal after 50 to 58 years of age.
Employees are required to verify employment details, employment status and other KYC requirements. Similarly, the employee should ensure that correct bank account information is provided and the bank account should be in the EPF account holder’s name. The claim may also be credited in the joint bank account of the individual maintained with his or her spouse.
The date of joining and leaving must be updated on the portal correctly. This is done through existing employers or past employers.
Employees would be required to complete the Aadhaar based verification process to validate and submit the relevant form.
Once the withdrawal amount is approved by the EPFO, the accumulated EPF or EPS amount shall be deposited in the respective bank account and an SMS for the confirmation of the same shall be sent to the registered mobile number of the individual.
Taxes on Withdrawal of Accumulated Balance of EPF and EPS
(A) Withdrawal of EPF
Conditions for exemption of EPF withdrawal
As per the relevant provisions of the Income-tax Act, 1961 (the Act), withdrawal of accumulated EPF contribution would be considered tax exempt in the following cases:
In case of individuals who have rendered continuous service of more than five years with one or more employers; or
Where an employee has not completed five years of service, but the withdrawal is due to specified reasons such as termination of employment on account of ill health of employee or on account of contraction or discontinuation of the employer’s business or any other reason which is beyond the employee’s control.
Conditions for Taxability of EPF Withdrawal
In case the accumulated EPF amount is withdrawn before five years of service, the amount would be considered taxable and is required to be offered to tax in the year in which the withdrawal is made.
Pertinent to note that the accumulated amount of EPF comprises employee contribution and matching employer contribution along with interest credited on such contribution over the tenure of employment. The taxability of different components would be determined as under:
Employer’s contribution – The employer’s contribution forming part of the accumulated amount is taxable in the hands of employees as “salary” income.
Employee’s contribution – In case the employee has claimedanydeduction under Section 80C of the Act in any of the past financial years towards the employee’s contribution to PF, such deduction would need to be reversed. i.e the employee’s contribution claimed as deduction under Section 80C in past years would be offered to tax in the year of withdrawal. Such an amount would be taxable as ‘income from other sources’.
Interest on Employee and Employer’s contribution – The accumulated amount of interest on employee and employer’s contribution is taxable as ‘income from other sources’.
It is important to note that in case the EPF withdrawal is considered taxable and the total withdrawal amount exceeds INR 50,000, the same is liable for tax deduction at source (TDS) at the rate of 10% (20% if PAN is not furnished) as per provisions of Section 192A of the Act.
The withdrawal is not subject to TDS if the member submits Form 15G/ Form 15H with the EPFO. Form 15G (applicable for individuals below the age of 60 years) /Form 15H (applicable for individuals aged 60 years or above) are self-declarations which may be submitted by the individuals declaring that their income is below the taxable threshold and hence, no TDS should be carried out for the amount credited to their account.
(B) Withdrawal of EPS
The monthly pension received from the EPFO is taxable in the hands of the employee as income from “salary”.
Any lump sum withdrawal from EPS, i.e. proportionate amount withdrawn before 10 years of continuous services is also taxable in the hands of employees as income from “salary”.
Bottom Line
The accumulated balance in the EPF and EPS accounts can be withdrawn even before the retirement age or 58 years, subject to the rules framed by the EPFO from time to time. The withdrawal process has been made much simpler with the introduction of the online portal and the mobile application.
However, an individual should carefully read the rules relating to criteria or eligibility for withdrawal, quantum of withdrawal, tax implications etc., and ensure that required documentation is available before placing a request for withdrawal of EPF or pension.
Employees’ Provident Fund Organization (EPFO) has revised several of its rules regarding withdrawal from the Provident Fund (PF) account in 2023. The aim of these revisions is to provide easier access to their PF funds to subscribers who are facing financial difficulties due to the coronavirus pandemic.
According to the new rules, PF account holders can withdraw money equivalent to three months of their basic salary plus dearness allowance or 75% of the net balance in their PF or EPF account, whichever is lower. This will be taken as a non-refundable deposit.
These withdrawal claims can be raised online. Online claims are stipulated to be settled within 3 working days while offline claims can take up to 20 days for settlement.
Reasons
Eligibility
Withdrawal Limit
Housing Loan for construction or addition of house/purchase of site/flat
Minimum 60 months of service
Up to to 36 months of his/her basic along with DA/ the total of employee and employer shares with interest/ the total cost of the house
Marriage of self/son/daughter/brother/sister or for post matriculation education of children
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.
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.
Steps for EPF Withdrawal Online
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.
Step 1: Visit the EPFO member portal.
Step 2: Choose the ‘For Employees’ option under the ‘Our Services’ tab.
Step 3: On the new webpage click on the ‘Member UAN/Online Service (OCS/OTCP)’ option under the ‘Services’ tab of the ‘For Employees’ page.
Step 4: This will redirect you to a new webpage. Log in to the portal using your UAN, password, and the Captcha code.
Step 5: Click on the ‘KYC’ option under the ‘Manage’ tab.
Step 6: You will be redirected to a new webpage. Scroll down to the bottom of the page to find the ‘Digitally Approved KYC’ section and check your KYC details. Ensure the details are correct.
Step 7: Click on the ‘Online Service’ tab from the top menu to proceed with the withdrawal if all the KYC details are correct.
Step 8: Click on the ‘CLAIM (FORM-31, 19 & 10C)’ option from the drop-down menu.
Step 9: You will be redirected to a new webpage with an automatically generated ‘ONLINE CLAIM (FORM 31, 19 & 10C)’ form.
Step 10: You will be required to enter the Last 4 digits of your registered bank account number and verify the same.
Step 11: After the verification of the bank account, a ‘Certificate of Undertaking’ will be generated. Click ‘Yes’ on the certificate pop-up to proceed.
Step 12: Click on the ‘Proceed for Online Claim’ option when prompted.
Step 13: For online fund withdrawal, select the ‘PF ADVANCE (FORM – 31)’ option from the drop-down menu provided next to the ‘I want to apply for’ option.
Step 14: A reason for a claim has to be selected from the drop-down options provided next to the ‘Purpose for which advance is required’ option. The fields provided for the address of the employee and the amount for an advance are also required to be filled in.
Step 15: Click on the checkbox at the end of the page and submit your withdrawal application.
Step 16: You might be required to upload certain scanned documents (depending on the nature of the withdrawal).
Step 17: Once the employer approves the withdrawal request, the withdrawal amount will be withdrawn from the EPF account and will be deposited to the respective bank account. Once the claim has been settled, you will receive an SMS notification on your registered mobile number.
Steps to Enter Exit Date and Withdraw Your PF Easily
If the withdrawal of your Provident Fund (PF) is delayed, then it may happen due to the exit date not being mentioned. Hence, in order to avoid this, The Employees’ Provident Fund Organisation (EPFO) has come up with a facility in the Unified Portal where the employee can enter the date of exit from the previous employer by himself. Previously, only the employer could enter the exit date, but now even employees can enter the date of exit.
You can change the exit date by logging in to the UAN portal using your Unified Account Number (UAN) and password. However, you must check whether the exit date is mentioned by clicking on ‘Service History‘ under ‘View‘ on the top panel.
Given below are the steps you will have to follow in order to enter the Exit Date:
Step 2: On the top panel, click on ‘Manage’ and click on ‘Mark Exit’ located under it
Step 3: From the drop-down option choose the employer
Step 4: You will be directed to a new page where you will have to enter your date of birth, date of joining, and date of exit. Mention the date of exit as the one mentioned in your resignation letter if your exit date is before the 15th day of the month
Tax-Free Limit for PF Withdrawals
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 withdraw your PF balance before the end of the 5-year period.
When you need to withdraw funds for medical emergencies or health issues that cannot be avoided
When your full PF amount is lower than Rs.50,000
When you withdraw your PF balance with Form 15G or Form 15H (If you submit PAN, then there will be a TDS at 10%)
When you transfer your PF balance from a PF account to another account
When the employer’s business is withdrawn
PF Withdrawal Rules
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 the 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.
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 the 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 at 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 a different PF account, it will be considered as continuous service to the scheme provided there has been no gap in contributions.
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.
Criteria for PF Withdrawal
1. When an employee is still under service
If he/she wishes to take an advance from the PF account, the composite claim form (Aadhaar/Non-Aadhaar) has to be submitted.
If he/she wishes to finance his/her LIC policy through the PF account, Form 14 has to be submitted.
Form 10D should be applied for a monthly pension if 10 years of eligible service has been completed.
The composite claim form (Aadhaar/Non-Aadhaar) should be submitted if 10 years of eligible service has not been completed.
2. When an employee switches the job
And wishes to transfer EPF 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 years, and has completed 10 years of eligible service, he/she can make a PF claim using the composite claim form (Aadhaar/Non-Aadhaar) and a pension claim using Form 10D
3. When an employee leaves an establishment due to a physical disability
He/she can make a PF claim using a composite claim form (Aadhaar/Non-Aadhaar).
He/she can make a pension claim using Form 10D.
Is above the age of 58 years and has not completed 10 years of eligible service, he/she can make the PF and pension claim using the composite claim form (Aadhaar/Non-Aadhaar).
4. When an employee is deceased while in service
Before the age of 58 years 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 years and having 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 years 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 (Aadhaar/Non-Aadhaar), and claim the EDLI amount using Form 5IF.
5. When an employee is deceased
Before the age of 58 years, the nominee/heir/beneficiary may claim the PF amount through Form 20, and the pension amount through Form 10D.
After the age of 58 years and having 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 years and had not completed 10 years of eligible service at the age of 58 years, 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 (Aadhaar/Non-Aadhaar).
Reasons for PF Withdrawal
The situations under which you can go ahead and withdraw money from your EPF while you are still working
IYou can withdraw money from your EPF account to meet the financial requirements of a medical treatment, provided it meets the following conditions:
Any major surgery in a particular hospital
The hospitalisation period is more than a month
The individual is suffering from Tuberculosis, Leprosy, Cancer, Mental Derangement, Paralysis, heart problems, etc. and is on leave that has been granted by the employer for the mentioned illness
You can actually withdraw the money in EPF at any given time during the period of your service. It is not needed that you to have completed a specific number of years in the organisation to claim that money. You can always draw the money for treatment purposes, even if you have completed one or two years in your present organisation.
You must also remember that the maximum amount that can be availed by you is your six months’ salary. This amount may not be very big, but it will offer you some help that you might need in a crisis situation. Not only can this advantage be taken anytime, but also, it can be enjoyed as many times as you want. Thus, your PF will save you for sure.
Certain documents must be provided by you along with Form 31
Your employer must give a certificate stating the insurance scheme offered by him and the benefits that are not available for the member. If not, then the member must provide a certificate issued by Employees’ State Insurance Corporation that would state that fact that the member can no longer avail the cash benefits provided by the Employees’ Insurance Scheme
The doctor must certify that hospitalisation for a period of one month is required in this case. Also, if there is a requirement for surgery, that must also be stated by the doctor in that certificate
2. Marriage Purposes
Money from your EPF can be withdrawn for an occasion like marriage in case you have already completed seven years of your service life. You can use up to 50 % of the amount that is there in your EPF account, and you can enjoy this advantage for a maximum of three times. So, let us consider that you have around INR 5 lacs in your EPF account. However, you must not calculate the entire amount when you wish to withdraw it for your marriage purposes. Just your own contribution towards EPF along with the interest accumulated on it is supposed to be calculated by you. Applicable cases are as follows.
Your own wedding
Wedding of your child
Wedding of your sibling
3. Construction of house or purchase of property
You can withdraw some money from the EPF when you are planning to purchase a house or construct a house. However, you must understand a few rules first.
The land or house that you wish to purchase must be on your name, your spouse’s name or jointly in both your names. Any other combination will not be allowed
You must have completed a period of 5 years in your service
The maximum amount that you can avail from your EPF account is 24 times your monthly salary
If you have taken a home loan and wish to prepay it, then you may withdraw some amount from your EPF. But to avail this benefit you must have completed ten years of your service. However, you can only avail this advantage once in your entire lifetime. Also, you can either use the EPF for purchasing a house or property or for repayment of your present home loan. You cannot avail money for both of them.
The property for which you are making the payment must be in your name, your spouse’s name or jointly held by both of you. Many people have joint home loans with their siblings or parents. In such cases, you will not be able to avail this particular benefit. An amount equivalent to 36 times your monthly salary can be availed from the EPF for the repayment of the existing home loan.
5. Education purposes
Some money from your EPF can be withdrawn for educational purposes. This advantage can be availed only for post matriculation educational expenditures. This means, if you admit your daughter or son to any university or college then you will be able to draw money from the EPF account. You must complete seven years of your service before you can avail this benefit.
6. Alteration or Repairs of your house
After several years of staying in a house, you might think that it needs some repairs. Some alterations can also be an option that will make things convenient for you. But this is a costly affair and could very well burn a hole in your pocket. You can avail some money from the EPF for this purpose. But first you need to know some rules.
You can withdraw and enjoy a maximum of 12 times your monthly salary
From the date of construction, the house that you wish to repair must be at least five years old
You must have completed a period of ten years in your service life
The house that you wish you repair must be under your name, your spouse’s name or jointly under both of your names
Other reasons for Withdrawing Money from EPF
If the member has reached the age of retirement.
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 are the withdrawal purpose, the minimum service requirement to be eligible to make the withdrawal, the PF withdrawal limit and the relations for whom the employee can make the withdrawal.
PF withdrawal reason
Minimum service
PF Withdrawal Limit
Relations
House Construction or purchase of plot
5 years
24 times the monthly salary for purchasing/36 times the monthly salary for purchase and construction, or the cost of the property or the total of employee and employer’s shares with the interest amount, whichever is less
The PF account holder and spouse or joint
Home Loan Repayment
3 years
90% of PF the balance
The PF account holder and spouse or joint
House renovation or alteration
5 years from the completion of the construction of a house
12 times the monthly salary
The PF account holder and spouse or joint
Marriage
7 years
50% of the employee’s contribution with interest
The PF account holder, siblings, and children
Medical treatment
Not required
Employee’s share with interest or 6 times the monthly salary, 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 requirements that are listed below, 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 have to be integrated as well.
For final settlements prior to the 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
Rules Pertaining to EPF
Contributions from employees as well as employers add to the EPF. However, unlike what is commonly thought to be, the entire portion of contribution from an employer doesn’t go exclusively towards the EPF. The division of funds is mentioned as follows –
12% of the Salary of the Employee goes directly towards EPF
12% of the Salary of the Employer is divided as follows –
3.67% of contribution towards EPF
1.1% of contribution towards EPF Administration Charges
0.5% of contribution towards Employees’ Deposit Linked Insurance (EDLI)
0.01% of contribution towards EDLI Administration Charges
8.33% of contribution towards Employees’ Pension Scheme
When Can I Withdraw from the EPF Account
Complete Withdrawal
EPF can be withdrawn under these cases:
When you retire
When you are unemployed for over two months. In order to make the withdrawal you have to get an attestation from a gazetted office.
Partial Withdrawal
Partial withdrawal from the EPF account can be made under a few circumstances.
House Construction or purchase of plot
5 years
24 times the monthly salary for purchasing/36 times the monthly salary for purchase and construction, or the cost of the property or the total of employee and employer’s shares with the interest amount, whichever is less
The PF account holder and spouse or joint
Home Loan Repayment
3 years
90% of PF the balance
The PF account holder and spouse or joint
House renovation or alteration
5 years from the completion of the construction of a house
12 times the monthly salary
The PF account holder and spouse or joint
Marriage
7 years
50% of the employee’s contribution with interest
The PF account holder, siblings, and children
Medical treatment
Not required
Employee’s share with interest or 6 times the monthly salary, whichever is lower
The PF account holder, parents, spouse, or children
Loan against EPF – Key summary– The Central Government had launched Employees’ Provident Fund (EPF) which is a retirement benefit scheme maintained by the Employees’ Provident Fund Organization (EPFO). The employee and the employer contribute to the EPF scheme on monthly basis in equal proportions of 12% of the basic salary and dearness allowance as mentioned under the provision of the law. The Indian government has approved this scheme for salaried employees.
The Employees’ Provident Fund (EPF) gives an easy access to EPF loan facility, allowing PF account holders to swiftly withdraw money from their savings when needed. Employees / PF account holders can withdraw some money from their PF accounts and use it as a personal loan. But it is not like the typical personal loan where the person has to repay the amount to the bank, the loan is non-refundable.
Monthly contribution of 24% as mentioned above (equally contributed by employer & employee both @ 12%) makes the employee eligible to avail the loan facility or withdraw funds from PF account after the thorough verification process conducted by the EPFO. It is imperative to note that EPFO usually considers loans as withdrawal instead of an advance.
How to get a loan against the provident fund?
For getting a loan against the PF an employee has to apply for it on the official portal of EPFO. The step-by-step process is as follows.
Login on the member interface of the EPFO unified portal using your credentials — Universal Account Number (UAN) allotted by EPFO and password.
Click on Manage > KYC and check that your KYC details are correct.
After login, go to the claims section under online services and verify your account details by entering the last four digits of your bank account number and confirm it by clicking on ‘proceed for online claims’.
Click on the drop-down menu and select Advances/Form 31 and then select the purpose of withdrawal; enter the amount you require and upload a scanned copy of your cancelled cheque followed by your address and other details that are required.
Lastly, verify the process via Aadhaar authentication by providing the OTP received by you and submitting the request for a loan.
The loan amount will be credited within 15 to 20 days after employer approves the withdrawal request.
PF loans do not have an interest rate but a specific cost to pay.
Documents required to avail of an EPF loan
Aadhaar card for verification
Cancelled cheque to verify bank details
Form 19 for PF final settlement
Form 31 for PF partial withdrawal
Form 10-C: It is required for pension withdrawal benefit.
Please note the additional requirements:
Universal Account Number (UAN) must be activated
The mobile number used to activate the UAN should be active for receiving OTP
Your Aadhaar Card details should have been seeded in the EPFO database.
OTP based facility must be availed for verifying eKYC from UIDAI while submitting the claim.
Bank account details and IFSC code should be seeded in the EPFO database.
How to check the Status of EPF Advance Claim
Step 1: Visit the EPFO website.
Step 2: Go to the “Services” tab and click “For Employees”.
Step 3: Go to the “Services” section and click on “Know Your Claim Status”.
Step 4: Enter your UAN and password to login.
Step 5: Provide your EPF account number, establishment code and state of your PF office and check the status of your claim.
The govt. has made several rules, to comply with to get the loans sanctioned, to prevent frequent withdrawals from PF contributions so that it can serve its basic purpose of accumulating savings for the retirement of employees.
Disclaimer:Every effort has been made to avoid errors or omissions in this material. In spite of this, errors may creep in. Any mistake, error or discrepancy noted may be brought to our notice which shall be taken care of in the next edition. In no event the author shall be liable for any direct, indirect, special or incidental damage resulting from or arising out of or in connection with the use of this information.
