Employees Provident Fund, managed by the Employees’ Provident Fund Organisation under the Ministry of Labour, Government of India is the most prominent social security scheme in India. Provident Fund (PF) is a financial savings scheme for salaried employees. It serves as a structured way for employees to save a portion of their income, which can be used during their retirement years.
Technically, the provident fund corpus accumulated over an employee’s tenure of service can only be withdrawn after retirement. However, funds can be withdrawn under specific conditions which we will be discussing in detail in this blog post.
Understanding Provident Fund (PF)
A Provident Fund (PF) is a retirement savings plan for salaried people. It is a government-managed savings scheme that mandates both employees and employers to contribute a portion of the employee’s salary each month.
Both the employee and the employer contribute 12% of the basic salary and dearness allowance towards the PF account. The regular monthly PF contributions also carry an annual interest which is declared by the EPFO every year, not to mention compound interest accrued annually. Further, the contribution made towards the PF account helps employees save taxes.
Eligibility and conditions for PF withdrawal
PF funds are meant to meet post-retirement financial needs. However, the fund can be partially withdrawn by the employee subject to specific eligibility conditions set by the Employees’ Provident Fund Organisation.
Eligibility criteria for PF withdrawal:
- PF account holders can make three different types of PF withdrawals: partial withdrawal, final settlement, and pension withdrawal benefit.
- Account holders cannot withdraw their PF funds, fully or partially, when they are still employed. However, if the account holder lose his job, they can withdraw up to 75% of their funds if they are unemployed for at least one month. The remaining funds can be withdrawn if the unemployment extends for two months or more.
- Withdrawal of ₹50,000 or more from the PF account within 5 years of opening an EPF account will attract a Tax Deducted at Source (TDS) of 10% or 30% if the account holder doesn’t have a valid PAN card. However, TDS deduction can be avoided by producing Form 15H or Form 15G.
Conditions for PF withdrawal
Besides the criteria discussed above, withdrawal is allowed on compassionate and medical grounds.
- Marriage or education: Partial withdrawal of the PF fund is allowed for expenses related to marriage and education (it could either be for the employee or their children). However, a PF account holder should have at least seven years of continuous PF contribution to become eligible.
- Medical reasons: In case of serious illness or medical conditions, PF account holders can partially or fully withdraw their PF balance. This facility is allowed for both self and immediate family members. Employees can withdraw 6 month’s basic salary and dearness allowance, or the employee share along with interest, whichever is less.
- Retirement: An account holder can withdraw up to 90% of the accumulated PF funds after the employee reaches 54 years of age or a year before retirement.
Types of PF withdrawal
PF withdrawal can be primarily divided into two:
Full PF Withdrawal: Full PF withdrawals can be done after retirement or prolonged unemployment. Employees can withdraw their full accumulated PF balance after retirement, resignation, or job loss.
Full PF withdrawal kicks in at the age of 58 or the superannuation age. Individuals who remain unemployed after a job loss can also access full withdrawal, with 75% available after two months of unemployment, and the remaining 25% if unemployment persists.
The documents required for full PF withdrawal are:
- Form 19 is the claim form for the final settlement of the PF account.
- Ensure that your UAN (Universal Account Number) is in active status. Also, UAN and bank account details should be linked.
- ID and address proofs like Aadhar and PAN Card must be provided
- Make sure your bank account is active.
Partial PF Withdrawal: An individual can withdraw a partial amount from their EPF account before its maturity to meet specific financial requirements. Employees facing unemployment or financial obligation arising from marriage or education, medical conditions, and other financial emergencies can avail partial withdrawal subject to terms and conditions.
Here’s how you can apply for a partial PF withdrawal:
Note: Requirements may vary depending on the purpose of withdrawal and the latest guidelines from the Employees’ Provident Fund Organisation (EPFO).
- Ensure you meet the eligibility criteria for partial PF withdrawal, like medical emergencies, education, marriage, etc.
- Make sure that your Universal Account Number (UAN) is active.
Online PF withdrawal process
Withdrawal of PF can be done online easily, making the process hassle-free. Let’s look at the steps involved:
Note: Ensure that your UAN is activated and it is linked to your Aadhaar, PAN, and bank account
Step 1- Visit the EPFO member portal and sign in with your UAN and Password.
Step 2- Navigate to the “Online Services” tab and select Claim Form applicable (Form-31, 19,10C & 10D).
Step 3: Fill up the form:
- You will be directed to a new page to fill out the withdrawal form.
- Enter the required details, such as the purpose of withdrawal, withdrawal amount, and bank account details.
- Provide additional information as per the form’s instructions.
Step 4 – After completing the form, click on the “Submit” button. (You may have to submit scanned documents depending on the purpose of withdrawal)
Physical application method for PF withdrawal
The physical application method for PF withdrawal involves submitting a physical form and documents to the authorities concerned.
While the online PF withdrawal process may be cumbersome for some, those who prefer to do it offline can visit their local EPFO office and submit a duly filled composite claim form. There are two versions of this form: Aadhaar and Non-Aadhaar. The Aadhaar Form doesn’t need employer attestation, whereas the Non-Aadhaar Form requires individuals to have their employer’s attestation before submitting it to the EPFO office.
Along with the Composite Claim Form, individuals would require ID proofs like PAN card and Aaadhar, two revenue stamps, one canceled cheque, bank account statement, and personal details like DOB and father’s name.
Taxation and TDS on PF withdrawal
Taxation on PF withdrawals is based on various factors like employment period and the withdrawal amount. Here’s a breakdown of the tax implications and the TDS (Tax Deducted at Source) rules for PF withdrawals:
- No tax on withdrawal after 5 years of continuous service: If PF is withdrawn partially or fully after five years of continuous service, there is no tax liability.
- Tax on withdrawal before 5 years of service: If PF is withdrawn before completing five years of continuous service, it is taxable. The entire withdrawal amount is added to the individual’s taxable income for that financial year and taxed per the tax slab.
- TDS on PF withdrawal:
- If the total PF withdrawal amount is above ₹50,000,
TDS is deducted at the time of payment.
- The TDS rate is 10% if the individual submits PAN details. If PAN is not provided, the TDS rate is 30%.
- If the total withdrawal amount is less than ₹50,000, there is no TDS deduction. Besides, individuals can avoid tax on their PF withdrawal by not withdrawing before completing five years of continuous service.
The accumulated PF amount is meant for retirement years, but it can be withdrawn if an individual is facing financial hurdles. To seamlessly withdraw the PF funds, individuals need to understand the PF withdrawal procedure. They can also refer to the EPFO website or their employer to help them guide through the procedure. Moreover, it is essential to keep UAN, Aaadhar, and PAN details updated and linked to the PF account to withdraw the amount hassle-free.
Q. How can I withdraw my PF amount online?
Ans. You can withdraw your PF amount online by following the steps below:
Step 1: Log in to the UAN Member e-Sewa portal.
Step 2: Select the ‘Online Services’ tab and click on the Claim (Form-31, 19 & 10C)’ option. Step 3: Member details will be displayed. Enter your bank account number registered with EPF and click ‘Verify’.
Q. Can I withdraw my 100% PF amount?
Ans. Under the Employee Provident Fund Act 1952, you can withdraw the full PF amount if you retire from your service after having attained the age of 58 years and you can also claim the EPS amount (Employees’ Pension Scheme amount) at the same time.
Q. Can I withdraw money from PF offline?
Ans. Yes, you can withdraw your provident fund money offline by visiting the respective EPFO office and submitting a duly filled Composite Claim Form.
Q. How many days it will take to settle online PF claim?
Ans. The time taken to settle a PF claim can vary depending on various factors, but the EPFO has set a maximum limit of 20 days. Most claims are settled within this time frame, and the process involves document verification, claim processing, and transfer of funds.
Q. Can I withdraw my PF on my own?
Ans. 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.