Employees' Provident Fund run by the Employees' Provident Fund Organization allows the employees to withdraw 100 per cent of the corpus after he / she meets the age of retirement and also one can withdraw up to 90 per cent of the corpus 1 year before retirement. The PF amount is payable in a lump sum at the time of retirement or at maturity.
A subscriber should therefore prepare the withdrawals properly to receive monthly income until his / her lifespan. Partial withdrawals are authorized for personal planning such as education, wedding, buying a new house or any. So it is suggested to keep the below-listed things in mind before making a withdrawal from EPF account.
1. A subscriber can withdraw 6 months' basic wages and Dearness Allowance (DA) or employees' shares with interest, whichever is lower. Government has allowed withdrawing either 75 per cent of the provident fund balance or 3-month wages as a non-refundable advance, whichever is lower.
2. However, the EPF corpus can be withdrawn only after retirement, premature withdrawal is not considered until the subscriber reaches 55 years of age and also one is allowed to withdraw 90 per cent of the EPF corpus 1 year before retirement.
3. According to the new rule, after 1 month of unemployment, EPFO allows 75 per cent withdrawal of the EPF corpus. And after finding a new job, the remaining 25 per cent will be transferred to a new EPF account.
4. EPF corpus withdrawal is completely tax-free under certain conditions. Tax exemption on EPF corpus is allowed only if an individual contributes 5 consecutive years to the EPF account. The amount of the EPF is taxable if there is a drop in the 5 continuous years of contribution to the account and hence the entire EPF amount for that fiscal year will be considered as taxable income.
5. Tax is deducted on premature withdrawal of the EPF corpus. However, TDS is not applicable if the entire amount is less than Rs.50,000. It is suggested to keep in mind that the applicable TDS rate is 10% if a subscriber submits PAN with the application or else it is 30% + GST.
6. As an EPF subscriber, you can withdraw your PF amount for emergency financial needs. For this, you need to submit partial PF withdrawal form attached with a medical certificate or a doctor's certificate. However, individuals will not have to present a medical certificate or any other document after the recent EPFO revision in order to partially withdraw PF amounts. According to the amendments included in paragraph 68-J and in compliance with paragraph 68-N of EPF Scheme 1952, a subscriber can withdraw funds partially and also make a self-declaration.
7. One can submit the Composite Claims Form to make a withdrawal directly to the EPFO if he / she has linked Aadhaar card details with their UAN. If an employee has not linked his / her Aadhaar card details with their UAN have to submit the Composite Claims Form authorized by their employer in order to make a withdrawal.