Claiming EPF corpus? Know these withdrawal rules

The Employees’ Provident Fund Organization (EPFO) changed several of its withdrawal restrictions in 2021. The purpose of these revisions is to make it easier for subscribers who are experiencing financial hardship due to the coronavirus outbreak to access their PF funds.

According to the new guidelines, PF account holders may withdraw funds equal to three months’ basic income + dearness allowance or 75% of their EPF account’s net balance, whichever is less. This amount will be considered a non-refundable deposit. These withdrawal requests are made online. Online claims must be resolved within three working days; however, offline claims may take up to 20 days to resolve.

Below are some important rules about EPF withdrawals:

Unlike a bank account, money in an EPF account cannot be withdrawn while you are employed. EPF is a long-term plan for saving for your golden years. Only after retirement will the funds be available for withdrawal.

In an emergency, such as a medical emergency, the purchase or construction of a home, or further education, a partial withdrawal from EPF accounts is permissible. There are restrictions for partial withdrawal based on the basis for the withdrawal. A partial withdrawal request can be made online by the account holder.

Even though the EPF corpus can only be withdrawn after retirement, early retirement is not considered until the person is 55 years of age or older. One year before retirement, EPFO permits withdrawal of 90% of the EPF corpus if the member is at least 54 years old.

If a person loses their job due to lock-down or retrenchment before retirement, the EPF corpus might be withdrawn.

To access their EPF funds, the EPF member must first declare themselves unemployed.

EPFO’s new rule allows for a 75 % withdrawal of the EPF corpus after a month of unemployment, which was previously prohibited. After changing jobs, the remaining 25% can be transferred to a new EPF account.

The old regulation states that you can withdraw your whole EPF account balance after two months of unemployment.

Withdrawal of EPF corpus is tax-free, but only if certain requirements are met. To be exempt from EPF corpus taxation, an employee must have paid into the EPF account for five consecutive years. If the employee stops contributing to the EPF account for five consecutive years, the sum is taxed. Consequently, for that fiscal year, the entire EPF payment will be treated as taxable income.

When an EPF corpus is prematurely withdrawn, tax is deducted at the source. There is no TDS on a sum less than Rs.50,000, on the other hand. Remember that if an employee submits their PAN number with their application, a 10% TDS will be applied.

Otherwise, you’ll owe a whopping 30% in addition to taxes. Using Form 15H/15G, an individual can declare that their total income is not taxable, so no TDS is required.

Employees can now withdraw their EPF funds without waiting for their employer’s approval. Directly from the EPFO, if the UAN and Aadhaar of the employee are linked and accepted by the employer. You can find out if your EPF withdrawal has been approved or denied online.