EPF Withdrawal Guide: Eligibility, Process, and Tax Rules Explained

EPF or the Employees’ Provident Fund is basically a government scheme introduced with the idea of promoting savings among working individuals. The EPF aims to build a retirement corpus for all the employees as a reward for their hard work and dedication for their jobs.

Every month, 12% of the employee’s dearness allowance and basic salary is contributed to the EPF. This contribution is made in equal ratio (12% each) by the employer and the employee, both. Additionally, an interest of 8.25% is also offered to the employee on the accumulated corpus.

While the employees can withdraw this amount only upon their retirement, it is still possible for them to withdraw a part of their EPF corpus in case of any emergencies, under certain conditions. This blog will talk about when you can withdraw EPF, what is the EPF withdrawal process and everything else!

EPF Withdrawal Limit – How much can you Withdraw?

EPFO allows a limited amount to be withdrawn from the employee’s EPF account. The withdrawal can be done partially or completely:

Complete Withdrawal: Circumstances

EPF (Employee Provident Fund) withdrawals can only be made entirely under specific circumstances:

1. Retirement: Individuals can withdraw their entire EPF balance upon retirement.
2. Unemployment: If an individual is unemployed for more than one month, they can withdraw 75% of their total accumulated EPF amount. If the unemployment period extends beyond two months, they can withdraw the remaining 25%.

It’s important to note that individuals cannot make a complete withdrawal of their EPF balance when switching employers unless they are unemployed for at least two months during the transition.

Partial Withdrawal: Limit & Purpose

Partial withdrawal of EPF is allowed only under the following certain conditions-

• Construction/Purchase of a property
  • The employee must have completed at least 5 years of continuous service
  • Employee can withdraw an amount equal to 24 times the monthly salary for purchasing a new property or 36 times the monthly salary for purchasing and constructing a new property at the most
  • Only the EPF account holder and/or his/her spouse can apply for EPF withdrawal in this case

• Medical treatment
  • There is no condition on the employment duration in case of EPF withdrawal for any medical treatment
  • Employees can withdraw an amount equal to his/her share along with interest or 6 times his/her monthly salary, whichever is lower
  • The EPF account holder, his/her parents, spouse or children can apply for the withdrawal

• Repayment of home loan
  • The employee should have been in continuous service for 10 years
  • The employee can withdraw an amount equal to 36  times the monthly salary
  • Only the EPF account holder and/or his/her spouse can apply for EPF withdrawal in this case

• Renovation of a house
  • The employee must have completed at least 5 years of continuous service from the date of completion of construction of the house
  • The employee can withdraw an amount equal to 12 times the monthly salary
  • Nobody apart from the EPF account holder and/or his/her spouse can apply for the withdrawal

• Wedding
  • The employee must have completed at least 7 years of continuous service
  • 50% of the employee’s contribution along with interest can be withdrawn by the employee
  • The EPF account holder, his/her siblings, and/or his/her children can apply for the withdrawal

Who can Withdraw EPF- Eligibility Conditions

Following conditions must be met by an employee to be eligible for EPF withdrawal-

• The total corpus accumulated in the EPF account can be withdrawn only upon retirement of the employee (Note that early retirement is also possible only after 55 years of age and not before that)
• Employees can withdraw 90% of their EPF corpus before 1 year of their retirement
• Considering the COVID-19 pandemic or similar situations when there might a lockdown in the entire country, EPFO has allowed withdrawal of EPF if an employee faces unemployment before retirement due to lockdown or retrenchment
• The new rules laid down by the EPFO also state that only 75% of the total EPF corpus can be withdrawn after 1 month of unemployment, while the remaining will be transferred to the new EPF after gaining employment
• Employee who link their UAN and Aadhaar to their EPF account can seek approval for EPF withdrawal from their employers online
• Employees must have their active UAN, bank details linked with their active UAN and details of their Aadhaar and PAN as seeded into the EPF database

Documents Required for EPF Withdrawal

The following documents must be furnished at the time of EPF withdrawal-

• UAN Number
• Your identity and address proof
• Bank account details
• Canceled cheque with IFSC code & account number

Conditions for EPF Withdrawal

Since the main objective of the Employees’ Provident Fund is to accumulate a corpus for the employees’ retirement, the correct time to withdraw the EPF is only after retirement. 

• The total corpus accumulated in the EPF account can be withdrawn only upon retirement of the employee
• EPFO considers early retirement only after the employee has crossed 55 years of age and not before that
• Employees can make a partial withdrawal from their EPF only under the following urgent conditions-
  • Medical emergency
  • Purchase of first property in the name of the employee
  • Higher education of the employee or his/her children

Process to Withdraw EPF: Online & Offline

You can follow either the online process or the offline process to withdraw your EPF. Explained below are both of them-

Online PF Withdrawal Process

Before you move on to the process to withdraw EPF, you must ensure that your UAN is activated and is linked with your KYC (Aadhaar and PAN Card details). After this is ensured, you must follow the below steps to withdraw your EPF online-

Step 1: Visit the UAN Portal and log in using your credentials.

Step 2: Click on the ‘Manage’ tab and select ‘KYC’ to check if your Aadhaar, PAN, and bank details are verified.

Step 3: Once verified, navigate to the ‘Online Services’ tab and choose ‘Claim (Form-31, 19, 10C & 10D)’ from the drop-down menu.

Step 4: You will see your member and KYC details. Enter your bank account number and click ‘Verify.’ Agree to the certificate of undertaking and proceed.

Step 5: In the claim form, select the type of claim you need: full EPF settlement, EPF part withdrawal (loan/advance), or pension withdrawal. Note that ineligible options will not appear.

Step 6: Choose ‘PF Advance (Form 31)’ for fund withdrawal. Provide the reason for the advance, the required amount, and your address.

Step 7: Click the certificate to submit your application. You may need to upload scanned documents for your request.

Note that EPFO will send you an SMS regarding your withdrawal request on the registered mobile number. Once your claim is processed, the requested amount will be transferred to your bank account. Generally, it takes around 15-20 working days for the money to be credited to the employee’s account.

Offline EPF Withdrawal Process

If you are not very comfortable with using the internet or online portals, you can always choose to withdraw your EPF through the offline means. All you need to do is visit the respective EPFO and submit a duly filled Composite Claim Form. 

It is important to note that there are actually two types of Composite Claim Forms- one is Aadhaar and the other is Non-Aadhaar. The former does not require any attestation from the employer while the latter requires your employer to attest the form before it is submitted to the jurisdictional EPFO office.

Taxation Rules on EPF Withdrawal

While the portion of an employee’s salary that gets contributed to the EPF is tax-free, there are certain rules on the taxation of the EPF corpus that gets withdrawn before retirement. The following table elaborates on the taxation rules on EPF withdrawal-

Apart from the above conditions, the following points should also be duly noted-

• If the employee does not have 5 years of continuous service, the entire EPF amount will be taxable
• If an employee’s total income is not taxable, he/she will have to fill Form 15 G/ 15 H
• Employee’s salary in the year of EPF withdrawal decides the actual tax that the employee would be liable to pay
• If the employee claims an exemption on EPF contribution in the years as per Section 80C before withdrawal, he/she will be liable to pay tax on employee’s contribution, employer’s contribution and the interest applicable on every deposit

Even though the major idea behind accumulation of funds in the EPF account is to build a corpus for the member’s retirement, he/she is allowed to withdraw a part of the accumulated corpus before the actual due time. While there is also an offline EPF withdrawal process, members can easily withdraw EPF online by following a hassle-free process. Online EPF withdrawal requests can be settled within 15 to 20 working days from the date of submitting the request. 

While it is possible to withdraw the EPF corpus before retirement, it is still advised that you do not do so. This is because early withdrawals from the EPF are not a part of the tax-deductible income of the employees. It is, instead, a taxable income if withdrawn before retirement. Hence, it is better to let the corpus accumulate and withdraw it only after retirement  and not before that.