As the lockdown situation might have rendered many cash-crunched, the provident fund body EPFO allowed PF subscribers to withdraw their deposit amount in the EPF account. While we have already discussed how to apply for the EPF Advance Pandemic facility, here are few other pointers that need your attention relating to the same issue.
So, some of the other key points on EPF withdrawal during Covid 19:
When should your withdraw from your EPF contributions?
Not all emergency situations should prompt you to consider your as there is compounding that happens in the interest calculation which could mean windfall losses for you if you abruptly consider withdrawal from the financial instrument.
Herein it should be noted that the non-refundable amount can be withdrawn which implies there's no need to refund the amount to the provident fund organization.
They can use the non-refundable advance of their PF balances to tide over their liquidity issues.
Other than the pandemic which has EPFO to take the decision on allowing PF withdrawal, there are other conditions that allow withdrawal from EPF such as:
1. Purchase or construction of homes
2. Loan repayment
3. Non-receipt of wage for two straight months
4. Marriage of self/daughter/son/brother
5. Medical treatment of family member
Also, the interest on EPF up to some limits is exempt from tax. And with a good interest now over and above the small savings interest rate, this is by far the best instrument which should be kept intact as far as possible.
2. Tax treatment of EPF withdrawals:
Income tax is not charged for any of the advance availed under the EPF scheme.
3. EFPO Pandemic facility advance facility is also to subscribers who have applied for other withdrawals:
And in this regard, the organization has been intimating subscribers that due to the operational impact due to Covid 19 lockdown, the process of processing withdrawal is taking longer and can be even made by subscribers who have applied for other EPF claims.
The message by the EPFO said, "Settlement of Covid 19 advance claims are being given high priority by EPFO and, for faster relief, you can apply for this even if you have already made any other claim. We are processing other claims too but disposal is affected due to lockdown. Hope you will bear with us."
And as per a recent report as many 1.37 lakh withdrawals have been processed valuing Rs. 280 crore given the exigency of the situation.