EPF or the Employees’ Provident Fund is basically a government scheme introduced with the idea of promoting savings among the 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 8.5% 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 everything about that- when you can withdraw EPF, what is the EPF withdrawal process and everything else!
EPF Withdrawal- Conditions
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 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- The total corpus accumulated in the EPF account can be withdrawn only upon retirement of the employee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 cross 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
How to Withdraw EPF?
You can follow either the online process or the offline process to withdraw your EPF. Explained below are both of them-
Online EPF 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, you must follow the below steps to withdraw your EPF online-
- Log in to the UAN member portal using your credentials
- Click on ‘Online services’ from the top menu bar
- From the dropdown menu, select the option of ‘Claim (Form-31, 19 & 10C)
- The next screen that opens will display all the member details
- On this screen, you need to enter the last 4 digits of your bank account number and click on ‘Verify’
- Sign the Certificate of Undertaking by clicking on ‘Yes’ and proceed with the steps
- Now, to withdraw your funds online, you need to select the ‘PF Advance (Form 31)’ option
- This will open a new section of the form, asking you to select the ‘Purpose for which withdrawal advance is required’
- In the same section of the form, you will be asked to enter the withdrawal amount along with the employee’s address
- After entering the details, ensure to tick mark on the certification to finally submit your EPF withdrawal application
- It is important to note that depending on the purpose of your withdrawal, you might also be asked to submit certain scanned documents
- After completing all the formalities, you will have to reach out to your employer to approve your request to withdraw EPF
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.
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-
- Composite Claim Form
- Identity Proof
- Address Proof
- Two revenue stamps
- One blank and cancelled cheque (should have visible IFSC and account number)
- Bank account statement (in the name of the EPF holder, while he/she is alive)
- Personal details such as-
- Father’s Name
- Date of birth
- ITR Forms 2 and 3, only if the employee withdraws his EPF corpus before 5 years of continuous service (This is required as a proof of detailed breakup of the amount deposited in the PF account every year)
EPF Withdrawal Limit- How much can you Withdraw?
EPFO allows a limited amount to be withdrawn from the employee’s EPF account. This amount depends upon the purpose of EPF withdrawal. Explained below is a detail of the same-
|Purpose of EPF Withdrawal||EPF Withdrawal Limit|
|Medical emergency||Total corpus or six times the monthly salary- whichever is lower|
|Wedding||50% of the total EPF contribution till date|
|Repayment of Home loan||Upto 90% of the total EPF corpus|
|Home Renovation||12 times the monthly salary|
|Unemployment||75% after 1 month of unemployment, 25% after 2nd month of unemployment|
When can you Withdraw EPF Corpus?
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 3 years
- 90% of the total EPF corpus can be withdrawn
- 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
- 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
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-
|EPF Withdrawal Condition||Taxation Rules|
|More than Rs. 50,000 is withdrawn before completion of 5 years of continuous service||10% of tax deduction at source is applicable if PAN is provided; otherwise 30% TDS plus tax will be applicable|
If Form 15G/ 15H is provided, no TDS will be deducted
|EPF is withdrawn after completing 5 years of continuous service||No TDS will be applied|
|Transfer of funds from EPF to NPS (National Pension Scheme)||No TDS will be applied|
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.