PF Withdrawal Rules
EPF or Employee Provident Fund should only be withdrawn at the time of retirement.
To encourage subscribers to transfer their money to a new PF account rather than withdraw the sum,
EPFO (Employees' Provident Fund Organisation) has taken many initiatives.
EPFO's "One Member - One EPF Account" facility can be availed by subscribers after logging into the EPFO's member-interface website and accessing the "Online Services" tab.
According to current rules, an EPFO subscriber can withdraw his/her EPF balance amount after remaining unemployed for two months.
In the case of employment with different employers, if the PF balance maintained with the old employer is transferred to the PF account of the new employer, it is considered as continued employment.
PF Withdrawal Rules before 5 years
- In case of withdrawal before 5 years, the amount becomes taxable in the same financial year.
- Thus, the amount has to be shown in your tax return for the next assessment year.
- The employer’s contribution to PF and interest earned on it added to one’s income and taxed accordingly.
Claim Benefits under Section 80C
- If you have claimed benefits under section 80C on your own PF contribution, it will tax as salary.
- The interest earned on contribution will tax.
- Income from other sources and taxed accordingly to the respective tax slabs.
- If the EPFO subscriber has contributed towards his/her EPF for a period of more than 5 years, the amount receives upon withdrawal is exempt from IT.
- A recent ruling by the IT tribunal upheld a law which states that the interest accumulated in your EPF or employer provident account after you quit the job is taxable.
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Partial EPF Withdrawal Rules
An EPFO subscriber can take advance from EPF deposits for the purpose such as
- Purchase/Construction of the House
- Repayment of the Loan
- Non-receipt of wages for two months
- For the Marriage of Self/Daughter/Son/Brother
- Medical Treatment of family members etc.
For each type of partial withdrawal/advance, the amount varies and employee needs to meet specific criteria for the eligibility.
One can also apply online through EPFO’s member’s portal for advance/partial withdrawal.
For withdrawals before completion of 5 continuous years towards the scheme,
The employee will tax 30% of the principal amount and the interest accrued if he/she has not submitted their PAN to the EPFO authorities.
If the employee has submitted his/her PAN details to the EPFO authorities, 10% TDS will be applicable.
If delay withdrawal after leaving employment, any interest accrued thereafter shall tax.
If an employee has terminated because of certain reasons beyond his or her control, the withdrawal does not attract any tax, irrespective of the number of years of employment.
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