What is EPF?
Employees’ Provident Fund (EPF), also known as PF (Provident Fund) is a mandatory savings and retirement scheme for eligible employees. Employees can rely on the fund’s corpus after they retire.
Employees must contribute 12% of their basic pay to this fund each month, according to EPF rules. The employer matches the employee’s contribution to the PF account. Annual interest is paid on funds deposited in EPF accounts.
Employees who retire can withdraw the entire amount accumulated in their EPF. However, this article explains how to make premature withdrawals from an EPF account if certain conditions are met.
Which forms are used for EPF withdrawal?
Form 19 of the EPF
To withdraw EPF funds for the final settlement, you must use EPF Form 19. The EPF Form 19 is a two-page form that includes the sections listed below.
The first page of the form includes the member’s name, father or spouse’s name, date of birth, name and address of the establishment, date of joining and date of leaving the company, PF Account Number and UAN, full postal address, PAN (Permanent Account Number), reason for leaving the organisation, mode of payment, and the signatures of the employer and the employee.
The advance stamped receipt is located on the second page of the form. You must fill out this section only if you choose cheque as your payment method.
New EPF Withdrawal Regulations for 2022
The EPF account is made up of contributions from both the employer and the employee. However, money in an EPF account cannot be withdrawn on the spur of the moment.
Here are the top ten EPF withdrawal rules:
· Unlike a bank account, money from an EPF account cannot be withdrawn while employed. The EPF is a long-term retirement savings plan. Only after retirement can the funds be withdrawn.
● In the event of an emergency, such as a medical emergency, home purchase or construction, or higher education, partial withdrawals from EPF accounts are permitted. Partial withdrawal is subject to restrictions based on the reason. The account holder can request a partial withdrawal online.
● Although the EPF corpus can only be withdrawn after retirement, early retirement is not considered until the individual reaches the age of 55. EPFO permits withdrawal of 90% of the EPF corpus one year before retirement, provided the individual is at least 54 years old.
● If a person becomes unemployed due to a lock-down or retrenchment, the EPF corpus can be withdrawn.
● To withdraw the EPF amount, the EPF subscriber must declare unemployment.
● The new rule allows EPFO to withdraw 75% of the EPF corpus after one month of unemployment. After finding new employment, the remaining 25% can be transferred to a new EPF account.
● According to the old rule, 100% EPF withdrawal is permitted after two months of unemployment.
● Withdrawals from EPF corpus are tax-free, but only under certain conditions.
● Tax exemption on EPF corpus is only available if an employee contributes to the EPF account for 5 years in a row. If there is a break in contributions to the account for 5 consecutive years, the EPF amount is taxable. In that case, the entire EPF amount becomes taxable income for that fiscal year.
● When an EPF corpus is withdrawn prematurely, tax is deducted at the source. TDS is not applicable if the total amount is less than Rs. 50,000. Keep in mind that the applicable TDS rate is 10% if an employee provides PAN with the application. Otherwise, the price is 30% plus tax. Form 15H/15G is a declaration form that states that a person’s total income is not taxable and that TDS can thus be avoided.
● Employees no longer have to wait for employer approval to withdraw their EPF funds. It is possible to do it directly through the EPFO if the employee’s UAN and Aadhaar are linked and the employer has approved it. The status of an EPF withdrawal can be checked online.
for Withdrawal of PF
1. When an employee is still on the job
● If he/she wishes to take an advance from the PF account, he/she must submit the composite claim form (Aadhaar / Non-Aadhaar).
● Form 14 must be submitted if he/she wishes to finance his/her LIC policy through the PF account.
● If he or she has reached the age of 58 and wishes to claim the pension fund.
● If you have completed 10 years of eligible service, fill out Form 10D to apply for a monthly pension.
● If 10 years of eligible service has not been completed, the composite claim form (Aadhaar/Non-Aadhaar) should be submitted.
2. When an employee changes jobs
● Form 13 should be used if you want to transfer your EPF account.
● When an employee leaves one company and does not return to another
● He or she can make a PF and pension fund claim by filling out the composite claim form (Aadhar/Non-Aadhar).
● Is over the age of 58 and has completed ten years of eligible service, he or she can file a PF claim using the composite claim form (Aadhaar/Non-Aadhaar) and a pension claim using Form 10D.
3. When an employee leaves a company because of a physical disability
● He or she may file a PF claim using the composite claim form (Aadhaar/Non-Aadhaar). ● He or she can file a pension claim with Form 10D.
● If he or she is over the age of 58 and has not completed 10 years of eligible service, he or she can file a PF and pension claim using the composite claim form (Aadhaar/Non-Aadhaar).
4. When an employee dies while on the job
● While still in service, the nominee/heir/beneficiary can apply for the PF settlement using Form 20, monthly pension using Form 10D, and EDLI (Employees’ Deposit Linked Insurance) amount using Form 5IF before the age of 58.
● After reaching the age of 58 and completing 10 years of eligible service, the nominee/heir/beneficiary can claim the PF via Form 20, the pension via Form 10D, and the EDLI via Form 5IF.
● If the nominee/heir/beneficiary is over the age of 58 and has not completed 10 years of eligible service, they can make the PF settlement using Form 20, withdraw the pension using the composite claim form (Aadhaar/Non-Aadhaar), and claim the EDLI amount using Form 5IF.
5. When an employee passes away
● Before reaching the age of 58, the nominee/heir/beneficiary may claim the PF amount using Form 20, and the pension amount using Form 10D.
● After reaching the age of 58 and completing ten years of eligible service, the nominee/heir/beneficiary may claim the PF amount on Form 20, and the pension amount on Form 10D.
● After the age of 58, if the nominee, heir, or beneficiary has not completed 10 years of eligible service, the nominee, heir, or beneficiary can apply for a final PF settlement using Form 20 and for the pension fund using the composite claim form (Aadhaar/Non-Aadhaar).
Documents Required for Withdrawal of PF
● The UAN (Universal Account Number) is required and can be obtained from your employer.
● Bank account information, including the name as it appears on the EPF account, must be provided.
● Because funds cannot be transferred to a third party while the holder is alive, the bank account must be in the name of the provident fund holder.
● Personal information such as the father’s name and date of birth should match the identity proof exactly.
● The employer must notify EPFO (Employee Provident Fund Organization) and register the employee’s departure from the organisation. The dates of joining and leaving must be clearly stated.
If the EPF amount is withdrawn before five years, there are tax implications.
The entire withdrawal amount is taxable. The monthly provident fund deduction is divided into two parts: employee contributions (your contribution) and employer matching contributions. Section 80C of the Income Tax Act allows for a deduction from taxable income for the employee’s contribution. If you claimed the same, it must now be reversed, and the tax liability must be recalculated, taking into account what the tax liability would have been if you had not claimed that deduction. The remaining balance must be paid. Similarly, the employer’s contribution would have resulted in a tax-free portion of the salary that year. The opposite must also be true. Interest should be taxed as “income from other sources.
It should also be noted that if the withdrawal amount exceeds Rs 50,000, it will be subject to a 10% TDS (Tax Deducted at Source).
Different Methods of Withdrawing EPF
As stated in the introduction, EPF contributions can be made both offline and online.
As a result, let us discuss the processes separately.
How Can I Withdraw My EPF Offline?
The offline withdrawal process of EPF is discussed below.
Step 1: Get the Composite Claim Form (Aadhaar or non-Aadhaar).
Step 2: Applicants using the Composite Claim Form (Aadhaar) must link their Aadhaar number to their primary bank account number (known as Aadhaar seeding) and provide bank account information. It also necessitates an activation process via the portal.
Step 3: Individuals applying with the Composite Claim Form (Non-Aadhaar) do not need to complete the Aadhaar seeding process in order to withdraw EPF.
Step 4: After filling out the data, individuals must submit the form to the appropriate jurisdictional EPFO office. The employer’s attestation is also required in this case.
How Can I Withdraw My EPF Online?
The online process for EPF withdrawal is detailed below.
Step 1: Go to the EPFO portal and navigate to the Member e-Sewa portal.
Step 2: Log in with your password, UAN, and Captcha code.
Step 3: From the ‘Online Services’ tab, select ‘Claim (Form-19, 31, 10C & 10D).
Step 4: A new page will open in which you must enter the correct bank account number associated with your UAN.
Step 5: Select Verify.
Step 6: After verifying your bank account information, you must confirm the EPFO’s terms and conditions.
Step 7: Click ‘Proceed With Online Claim.’
Step 8: From a drop-down list, select the reasons for the withdrawal. Remember that the options shown in the list are based on your eligibility.
Step 9: After selecting the reasons for withdrawal or advancement, individuals must provide their address. Individuals claiming an advance must specify the amount and upload a scanned copy of the required documents (as instructed by EPFO).
Step 10: Select Terms and Conditions.
Step 11: Click on ‘Get Aadhaar OTP.’
Step 12: You will receive an OTP to your registered mobile number. Insert the OTP into the appropriate box.
Step 13: After successfully entering the OTP, the online EPF withdrawal claim will be submitted.
Individuals must activate UAN and link it with the KYC, which includes Aadhaar, PAN, and bank details, in order to withdraw EPF online. Individuals can easily claim EPF withdrawal once all of the conditions are met.
How Long Does It Take to Withdraw EPF?
The time it takes to clear claims from the pension body is determined by the mode of withdrawal application.
These are listed below –
● Online applications for EPF withdrawal can take up to three working days.
● Offline applications for EPF withdrawal, on the other hand, can take up to 20 days to be processed.
How Often Can EPF Be Withdrawn?
Advance EPF withdrawals are permitted in certain circumstances and subject to certain restrictions.
These are discussed further below.
● Individuals who want to withdraw their EPF for marriage purposes can only do so three times.
● Individuals who withdraw EPF to buy a plot or build a house can apply for a one-time EPF advance claim.
● Withdrawal has no set limit in the event of a medical emergency (prior to retirement).
● EPF withdrawal (advance) for post-secondary education can be made three times.
How Do I Check the Status of My EPF Withdrawal?
Individuals can check the status of their EPF withdrawal request online once it has been submitted.
To check the status of your EPF withdrawal, follow the steps outlined below.
Step 1: Go to the EPFO website.
Step 2: Select ‘For Employees’ from the drop-down list under the ‘Our Services’ tab.
Step 3: Select “Know Your Claim Status.
Step 4: Enter your UAN.
Step 5: Type in the Captcha code.
Step 6: Provide information such as the state of the PF office, the respective PF office, the establishment code, and the Provident Fund number.
Step 7: Click ‘Submit’ to check the status of your EPF withdrawal.