PF, or Provident Fund, is a contribution-based savings scheme where both the employee and the employer contribute to create a monetary fund to cater to post-retirement necessities. The corpus created can be accessed or withdrawn by the employee subject to certain Provident Fund withdrawal rules.
The Employee Provident Fund in India is administered by a statutory body, Employees’ Provident Fund Organisation, offering a financial backup for Indian residents employed in the organised sector.
PF is meant to be withdrawn after an individual’s retirement. However, there are certain Provident Fund withdrawal rules that allow the individual to utilise the accumulated sum for emergency purposes.
Account-holders can make three different types of PF withdrawals, namely –
An individual can withdraw a partial amount from his or her provident fund account before its maturity (except in the case of unemployment) under certain situations.
Here are some of the circumstances that allow an individual to prematurely withdraw the sum.
A PF account holder can withdraw up to 75% of the total accumulated amount if he/she has been unemployed for more than 1 month after relinquishing employment. This provision also allows the account holder to withdraw the remaining 25% if the unemployment period stretches over 2 months.
PF account holders can withdraw up to 50% of the total employee’s contribution to EPF to pay for their higher education or to bear the education cost of their children after class 10.
The funds will be transferable after contributing a minimum of 7 years towards the EPF account.
The latest PF withdrawal rules also allow an account holder to withdraw up to 50% of the employee’s share to pay for the necessary expenses for a marriage.
The marriage should be of the individual concerned, or the account holder’s son, daughter, brother, and sister. However, this provision can be utilised only after the completion of 7 years of PF contribution.
Under the PF withdrawal rules 2022, specially-abled account holders can withdraw 6 months basic wage along with dearness allowance, or employee share with interest (whichever is less), to pay for the cost of equipment. This decision was made to help ease the financial burden individuals might experience to purchase expensive equipment.
A PF or EPF account holder can also withdraw the EPF balance to pay for urgent medical treatments for certain diseases. This facility is allowed for both self-usage or to pay for treatment of immediate family members. One can withdraw 6 month’s basic wage and dearness allowance, or the employee share along with interest, whichever is less.
Individuals can withdraw 36 months of basic wage + dearness allowance, or the total of employee and employer share along with interest to pay their home loan EMIs.
However, this facility is available only after a minimum of 10 year’s contribution towards the EPF account.
According to PF withdrawal rules, the account holder is allowed to make a premature withdrawal to purchase empty land or prefabricated houses.
EPFO has allocated a PF withdrawal limit for this purpose; for example –
|Contribution towards EPF||Withdrawal limit||Purpose|
|24 month’s basic wage and Dearness Allowance||The accumulated funds from the EPF account, including the employee and employer’s share.||To purchase a house, flat, or to construct a residential property.|
|36 month’s basic wage plus Dearness Allowance||The accumulated funds along with the total interest, whichever is lower.||To purchase or construct a residential property or flat.|
Provident fund new rules also come with a provision to withdraw 12 month’s basic wage plus Dearness Allowance, as well as the employee’s share with interest (whichever is smaller) for home alteration, improvement, or expansion.
The residential property can be of the PF account holder, owned by his or her spouse, or owned jointly.
An individual can avail this facility 2 times, once after 5 years of completing the residential property, and after 10 years can withdraw PF amount for the first time.
Revised EPF withdrawal rules also allow an account holder to withdraw up to 90% of the accumulated funds after they reach 54 years of age or a year before retirement/superannuation.
Also, in case of the sudden demise of an employee (while he or she is still in service), their nominee/beneficiary can apply for a settlement (Form 20), or a monthly pension (Form 10D).
PF withdrawal rules provide adequate flexibility to allow an individual to cater to various emergency requirements using their savings.
One can also choose to invest in other high-return investment options, like Mutual Funds, if they have surplus funds after utilising the withdrawn amount.
These investment options offer a higher return than traditional savings schemes, while tax saving Mutual Funds can also help an individual to decrease their tax liability.
If your Provident Fund (PF) withdrawal is being delayed, it could be because the exit date has not been specified. To avoid this, the Employees’ Provident Fund Organisation (EPFO) has created a feature on the Unified Portal where the employee can input the date of departure from the previous employer on his or her own. Previously, only the employer could enter the exit date, but now employees can do so as well.
By login into the UAN portal with your Unifversal Account Number (UAN) and password, you can adjust the exit date. However, you must verify to see if the exit date is listed by clicking on ‘Service History’ in the top panel under ‘View.’
The following are the steps you must take in order to enter the Exit Date:
You will be taken to a new page where you must input your birth date, date of joining, and date of exit. If your departure date is before the 15th of the month, refer to the date on your resignation letter.
If you have a complaint about the EPFO’s services, you can file it online through the EPF grievance handling system. You can file a grievance, send a reminder, check the status of your complaint or grievance, upload your grievance paperwork, and even change your password using this system.
An account holder can also lower their tax liability on premature withdrawal of their PF amount. Usually, withdrawals are liable for TDS.
But, according to the revised EPF withdrawal rules 2022, withdrawal of funds after a minimum of 5 years of service will attract no TDS.
Employee’s Provident Fund was already an attractive savings scheme, with the facility to transfer one’s EPF account with a UAN number, and with the provision to earn interest on the balance fund for up to 3 years without any contribution. The new withdrawal rules have made the system even more beneficial for individuals working in the organised sector, thanks to the provision to avail funds at an emergency basis.
Q1. Can I prematurely withdraw PF?
Yes. When you meet certain conditions, you can do so.
Q2. Will I need the permission of my employer to withdraw my PF amount?
According to the new norms, you can withdraw the amount without the employer’s permission.
Q3. If I contribute higher to my PF, will the employer also have to do so?
No. The employer will contribute the same bare minimum.
Q4. How can I avoid TDS on withdrawal?
Instead of withdrawing you PF when you change your job, you can transfer it to the new one, and when you withdraw it after 5 years, you will not attract TDS.
Q5. Can I get the PF passbook printed?
Yes, you can. Through it you can show your transactions.