EPF or PF Withdrawal Rules

PF Withdrawal Rules – Home, Medical & Retirement

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 The corpus created can be accessed or withdrawn by the employee subject to certain Provident Fund withdrawal rules.

Both the employee and employer contribute an equal portion (12%) of their basic pay and dearness allowance every month.

The input is accumulated throughout an individual’s career to build a substantial sum of money. 3.67% of the employer’s contribution goes towards EPF, while the other 8.33% goes in the Employees’ Pension Scheme.

PF, also referred to as EPF (Employees Provident Fund) is one of the most recognised social security programs supervised by the Government of India. Individuals can accumulate a large retirement corpus thanks to the 8.65% interest rate on PF deposits.

For example, let’s presume an individual 30 years of age starts contributing towards EPF at 12% (provided his or her basic salary is Rs. 20,000). If he/she earns a salary hike of 8% annually and intends to retire at an age of 60 years, he/she will be able to accumulate Rs. 1,73,88,271 by the time of his or her retirement.

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.

Withdrawal of Provident Fund

PF is meant to be withdrawn after an individual’s retirement.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 –

  • PF final settlement.
  • PF partial withdrawal.
  • Pension withdrawal benefit.

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.

Provident Fund Withdrawal Rules 2019

  • In case of unemployment – 

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.

It is in accordance with the latest EPF rules introduced by the Labour Minister, Santosh Ganwar in August 2019. This provision also allows the account holder to withdraw the remaining 25% if the unemployment period stretches over 2 months.

  • For education – 

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.

  • To pay for marriage – 

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.

  • For specially-abled individuals – 

Under the PF withdrawal rules 2019, 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.

  • For medical emergencies – 

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.

  • To pay for existing debts – 

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.

  • To purchase residential property or land plots – 

According to PF withdrawal new rules, the account holder is allowed to make a premature withdrawal to purchase empty land or prefabricated houses.

EPFO has allocated different 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.
  • For home renovation – 

Provident fund new rules also comes 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 from withdrawing the PF amount for the first time.

Revised EPF withdrawal rules also allow an account holder can also 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 new 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.

Lowering Tax Burden on EPF Withdrawal

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 PF withdrawal rules 2019, withdrawal of funds after minimum 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 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.


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