Employees can now avail of advance based on their salary due to Covid related treatment. As more people become infected with the highly contagious Coronavirus, Covid cases are increasingly increasing across India. People are concerned about the cost of Covid care at this time.
But EPF members need not worry as Government has made loan and withdrawal facilities available for all its EPF members. The advance is non-refundable, and the employee is not required to deposit the funds into their EPF account. During the COVID-19 lockdown, the withdrawal will provide liquidity to employees. The application for the COVID-19 claim is allowed even if any other advance is pending.
EPF COVID Withdrawal Rules
Individuals who need to withdraw money for Covid care can do so under the guise of a medical emergency for a partner, a family member, a parent, or children. In general, if an employee, his or her parent, partner, or children become ill as a result of Covid, the member has the option to withdraw funds. There is no lock-in period or minimum service period for this form of EPF withdrawal.
How to calculate the EPF withdrawal amount for COVID?
An EPF member can borrow up to three months' salary or wages plus dearness allowance from their EPF balance, or 75% of the balance in their account, whichever is less.
Option 1: Three months' salary (here, salary = basic pay + dearness allowance
Option 2: 75% of total EPF balance in your account
If an employee's monthly wage, including basic pay and dearness allowance, is Rs. 50,000 and his EPF account is worth Rs. 4 lakh, you can withdraw.
Option 1: = 50,000 x 3 = Rs. 1.5 lakh
Option 2: 75% x 4,00,000 = Rs. 3 lakh
Note that the employee would be able to withdraw up to Rs. 1.5 lakh not Rs 3 lakhs from his EPF account. It's worth noting that an EPF advance request due to the COVID-19 situation can only be submitted once.
Pre requisite or EPF Withdrawal for Covid Treatment
a) The EPF member's Universal Account Number (UAN) must be activated.
b) The Aadhaar number must be checked and linked to the UAN.
c) A UAN should be linked to an EPF member's bank account with the right IFSC.
How to apply for EPF withdrawal due to Covid Treatment online?
Step 1: Login https://unifiedportal-mem.epfindia.gov.in/memberinterface/
Step 2: Login using EPF credentials
Step 3: Click on online services and select claim (Form -31, 19,10C, and 10D).
Step 4: On the new page, enter the bank account number and verify
Step 5: Click on 'proceed for online claim'.
Step 6: Select 'PF advance (Form 31)'
Step 7: From the drop-down menu, choose 'pandemic (Covid-19)' as the reason for your withdrawal.
Step 8: Fill in the required amount, upload a scanned copy of the cheque, and include your address.
Step 9: Enter OTP
The claim request will be submitted after the OTP has been successfully submitted. When the EPFO accepts your argument and the information you provided matches, the money will be credited to your bank account.
How to file an EPF COVID claim through the UMANG app?
Step 1: Open the Umang app
Step 2: Select EPFO
Step 3: Select "Request for Advance (COVID-19)"
Step 4: Enter your UAN details and click on 'Get OTP'
Step 5: Enter the OTP and click on login.
Step 6: Select the member ID from the drop-down menu and enter the last four digits of your bank account.
Step 7: Click on "Proceed for the claim"
Step 6: Enter your address. Click on 'Next'.
Step 7: Upload the screenshot of the cheque that has your account number and name written on it.
Your claim will be successfully lodged after all of the details are entered.
Tax implications on COVID-19 withdrawal
The EPFO clarifies that the amount of advance that an employee withdraws due to COVID-19 is not subject to income tax. The ability to withdraw EPF funds and receive a non-refundable advance is intended to assist workers in need of funds during the COVID-19 lockout. Employees may choose to use their EPF savings to meet their financial needs. Only if an employee has worked for the company for five years in a row is an EPF withdrawal tax-free. If an advance is provided in response to a pandemic, however, a tax or TDS on the withdrawal will negate the purpose of the advance, which is to provide liquidity.