In general, every organization where more than 20 persons are employed as employees are required to be registered with the Employee Provident Fund Organization (“EPFO”).
Employee Provident Fund Act, 1952 (known as “EPF” Act), under the EPF scheme is where both employer and employee contribute a certain amount i.e., 12% of the Basic Salary including DA, if any, every month as a contribution. The deducted amount shall be deposited in the Provident Fund (“PF”) Account of the employee which is reflected through the return to the department for the compliance. The interest earned on this amount is also credited in the Provident Fund Account of the employee. Employee withdrawal such amount at the time of retirement, if certain prescribed conditions are satisfied.
Criteria for Withdrawal
- Employee Provident Fund (“EPF”) can be claimed by the employee in a case when unemployed, for the purpose of education, medical condition, emergencies and at the time of retirement.
- Employees can withdraw the amount from a particular account of PF employees by filling and submitting Form 31 online on the employee portal of EPFO.
- The employee PF Account is taxable if the amount of provident fund is withdrawn before the completion of five continuous years of service.
Modes of withdrawal
The employee can do the withdrawal from EPF Account through the following modes:
- Visit the UAN member portal;
- Login with your UAN and password and enter a captcha.
- The employee is required to submit KYC details then Universal Account Number (“UAN”) is to be allotted by Employee Provident Fund Organization (“EPFO”);
- Member can proceed with the withdrawal of all the KYC details are correct and PAN is necessary in case of EPF to withdraw before the completing 5 years of service;
- Fill the Form 31 for partial withdrawal, Form 10C for pension withdrawal and Form 19 is filled for Provident Fund final settlement and submit it to the EPFO through an employer;
- Once they submit the form then employee claims the Provident Fund Amount
- The employee needs to visit EPFO office;
- The employee is required to submit Aadhar and PAN details;
- Download the Form 31 for partial withdrawal, Form 10C for pension withdrawal and Form 19 is filled for Provident Fund final settlement and submit it to the EPFO office through an employer;
- Certification by the employer is necessary;
- Employee claims the PF amount in offline mode it shall take 20 to 30 days to approve.
Details to be filled in EPF Form 31:
- Identity details of the employee
- PF account number
- Details related to a bank account
- Amount of the advance that has to be withdrawn
- Details of the monthly salary of the employee
Types of EPF withdrawal
There are three types of EPF withdrawal which are as follows:
- Provident Fund final settlement – when an employee terminates the job or at the time of retirement.
- Provident Fund partial withdrawal – the EPF amount can be withdrawn for the purpose of the marriage, education, purchase or construction of a house or health-related issues.
- Pension withdrawal – when the employee attains the age of 50 years and has rendered at least 10 years of service.
Limits on Premature PF withdrawal:
- The member can advance PF withdrawal only 3 times, in case of marriage and for education.
- In case a member wishes to purchase or construct a house, only one time he can claim in advance the PF amount.
- No limit in case of emergency or health-related issues; the member can withdraw in advance before retirement.
New EPF withdrawal Rules 2020
The New rules related to EPF withdrawal have been notified with effect from January 01, 2020, with salient features as follows:
- During employment, the member cannot withdraw money from the EPF account. The money can be withdrawn only after retirement.
- In case of Partial withdrawal from EPF account, it is allowed only in case of an emergency. Such emergencies are mentioned above.
- The money from the EPF account can be withdrawn only after retirement, early retirement is not considered until the person reaches 55 years of age.
- The member can withdraw the 75% of EPF corpus in case more than 1 month of unemployment and balance 25% can be transferred to a new EPF account after joining new employment. Whereas as per old rules, the member can withdraw the 100% of EPF amount only after 2 months of unemployment.
- Tax Deducted at Source (“TDS”) on or before the maturity of the EPF amount is not deducted if the entire amount is less than Rs. 50,000.
- The applicable TDS rate is 10% if an employee submits his PAN details to Employee Provident Fund Organization (“EPFO”) and 30% in a case without having PAN.
- EPF contribution withdrawal is exempted from tax under certain conditions. EPF corpus is allowed only if an employee contributes to the EPF for 5 continuous years. Whereas the EPF contribution is taxable if there is a break in contribution to accounting for 5 continuous years.
Need more guidance
write to us at firstname.lastname@example.org