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The Employees' Provident Fund (EPF), also known as the Provident Fund (PF), serves as a mandatory savings and retirement scheme for employees that can be used at the time of retirement. As per the rules and regulations of EPF, employees can withdraw the entire EPF account balance once they retire. However, the Income Tax Act also provides for premature withdrawal of EPF subject to certain conditions. In this article, we explore the various provisions related to EPF withdrawal and how to withdraw through Form 15G for EPF withdrawal.
Recent Update: The interest rate under EPF has been revised to 8.25% for FY 23-24.
Employee’s Provident Fund Scheme is a social security scheme. You contribute towards this scheme during your employment period. You (the employee) contribute at least 12% of your basic salary towards the scheme. Your employer also contributes some amount towards your EPF which combinedly is known as ‘EPF corpus’.
This scheme is managed by the Employee’s Provident Fund Organization (EPFO). EPFO is responsible for online transfers, claims, and withdrawals. Initially, the employees had to undergo the tedious process of withdrawing and transferring PF since the employees received new member IDs with new employment. But with the advent of Universal Account Number (UAN), the process has been simplified to a great extent. UAN acts as an umbrella account to which all your PF accounts can be linked. With this, you can easily file claims for online transfer or PF withdrawal. You can also check for KYC details attached to your account.
PF withdrawals become a necessity when you are planning your retirement or leaving your job and taking a break. You might also need your EPF funds for unavoidable situations. For all these purposes, it is imperative that you know how to withdraw your funds and what are the requirements.
You can withdraw the entire EPF amount only under two conditions:
For complete PF withdrawal while switching employers, individuals need to be unemployed for 2 months or more after leaving their jobs.
You can make partial withdrawals from your EPF balance only under certain conditions. These are explained in the table below:
| Purpose | Years of Service Required | Conditions for Partial Withdrawal |
|---|---|---|
| Medical purposes | None | For medical treatment of self, spouse, children, or parents |
| Marriage | 7 years | For the marriage of self, son/daughter, or brother/sister |
| Education | 7 years | For the education of the account holder or their child (post matriculation) |
| Purchase of site, flat, or house; construction of a house | 5 years | The property must be in the name of the employee, spouse, or jointly with the spouse |
| Home, site, or flat purchase or construction loan repayment | 10 years | The property must be registered in the name of the employee, spouse, or jointly with the spouse. Withdrawal is subject to submitting necessary documents related to the housing loan |
| House renovation | 5 years | The property must be registered in the name of the employee, spouse, or jointly with the spouse. This can be availed twice: a) First time - after 5 years of house completion b) Second time - after 10 years of the first withdrawal |
| Partial withdrawal before retirement | 54 years | The employee must be 54 years old and the withdrawal should be made within one year before retirement or superannuation. |
| Purpose of Withdrawal | Limit for Withdrawal |
|---|---|
| Medical purposes |
Lower of:
|
| Marriage | Up to 50% of employee’s share of contribution to EPF plus interest |
| Education | Up to 50% of employee’s share of contribution to EPF plus interest |
| Purchase of site, flat, or house; construction of a house |
Lower of:
|
| Home, site, or flat purchase or construction loan repayment |
Least of:
|
| House renovation |
Least of:
|
| Partial withdrawal before retirement | Up to 90% of accumulated balance with interest |
Given below are the steps that you need to follow to do premature PF withdrawals -
EPF withdrawals are tax-free if an employee has contributed to the EPF account for five consecutive years. If there is a break in the five years of contributions, the EPF withdrawal amount becomes taxable for that financial year.
TDS is deducted if an employee withdraws EPF before completing five years and the amount exceeds Rs. 50,000. The TDS rates are as follows:
No TDS is deducted when an employee withdraws EPF after completing five years of continuous service, regardless of the withdrawal amount.
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The time required for withdrawal usually depends upon the mode of withdrawal. The process will be faster and easier if your KYC details are verified. If you have applied for withdrawal via online means, the process will take a maximum of 10 days. If you have applied via offline means, you will receive your PF withdrawals within 20 days.
Some of the basic withdrawal rules issued by the EPFO are:
Full PF withdrawals are not permitted during employment. During employment, you can only file for partial withdrawals and the reasons should be listed and approved by the EPFO.
To check the status of your PF withdrawals, follow the steps mentioned below:
To check your PF balance via SMS, drop an SMS to 7738299899 in the format mentioned below:
Type ‘EPFOHO UAN’ and send it to the number mentioned above.
