In India, the Employees’ Provident Fund Organization administers a compulsory contributory provident fund scheme for all employees engaged in the organised sector in India. In India, the provident scheme covers Indian and international employees (all countries with whom India has signed bilateral agreements). It is possibly the biggest social security organisation in India across private and public sectors.
The Employees Provident Fund can be withdrawn in three kinds of situations. It can be withdrawn after retirement, if you are unemployed for two months or more at a time or if the employee dies before the retirement age. While the withdrawal of EPF in different contexts entails and implies different rules and conditions, there are certain basic things that you must keep in mind before wanting to make a withdrawal from your provident fund.
Things to Remember before Withdrawing from your Provident Fund
The main purpose of the EPF is to provide a measure of financial security for an employees’ post-retirement life where one may not have a source of income. Consequently, as a retired employee, one also relies on the PF as exclusively supporting one’s retired life. There are certain things to keep in mind irrespective of the time and circumstance of the withdrawal.
- Any withdrawal from the provident from within five years of opening the account is liable to taxation.
- Unlike earlier, it is not mandatory anymore to withdraw one’s provident fund while changing jobs. Under the Universal Account Number ID system, the PF gets automatically transferred from one employer account to another.
- You can, however, not withdraw from the provident fund balance from a job where you are currently employed.
- A loan can be availed against the Employee Provident Fund.
Withdrawing the EPF after Retirement
The EPF can be withdrawn for a variety of reasons such as for medical treatments, for repaying a home loan, for a wedding, for renovating your home or for purchasing a new house. Moreover, in case you are unemployed and need funds, you can withdraw money from EPF. In the absence of extenuating circumstances, the EPF is generally kept aside to be withdrawn and accessed after retirement.
To withdraw the EPF after retirement, there are certain rules and conditions that you can see below:
- According to the EPF Act, an employee who is a member of the EPFO has to claim for the final settlement at the age of 58 years, which is the statutory age of retirement.
- The PF is a sum of the contributions of the employees and the employers.
- Any employee who has served for a period of 10 years or more is eligible to access the EPF account.
- Any employee who is not a member of the EPFO for at least ten years cannot withdraw from the provident fund.
- Withdrawing from the EPF account after retirement is not taxable.
- However, the interest earned on the EPF after retirement is taxable.
- Now, any employee who is a member of the EPFO can fill an online form and claim his/her funds.
- Any employee who does not withdraw funds for a period of at least three years will have to pay tax on the interest earned through the EPF.
How to Withdraw from an EPF
The EPF can be withdrawn using an ‘Old Form’ or the ‘New Form’. As the names suggest, the former entails the earlier method of withdrawing from the EPF, while the ‘New Form’ suggest the new method using the UAN.
To withdraw using the old form, you will need to follow these steps:
- Ask the HR team of your employer for form 19 that you can use for EPF withdrawal. You could also download it from the EPFO website.
- Fill in all the relevant details such as account number, employment details and bank details such as IFSC code.
- Submit the filled form to your employer, which he/she will attest and send to the regional provident fund office.
The funds from the PF corpus will be automatically credited your bank account. However, it will take longer than the online process.
Withdrawing from the PF using the ‘New Form’ is relatively easier in that the employee does not need the attestation or approval of the employer. To withdraw using the new form, you need to perform a few steps as follows:
- Update your Aadhar card number on the UAN portal.
- Get your Aadhar number authenticated by your employer and link to your UAN ID.
- Fill the form at the EPFO online portal and submit it online.
You will receive your withdrawn amount into your bank account within a fortnight and is considerably quicker than the offline process using the ‘Old Form’.
While the EPF is one of the most secure and reliable post-retirement financial plans for employees in public and private sectors, investing in flexible fixed deposit plans, such as those offered by Bajaj Finance can supplement your financial security further.