When and how can you make withdrawals from your provident fund contribution

EPF contribution withdrawal

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Application for withdrawal from the provident fund can be made online or offline. Pic:EPFO

We have all grappled with the question of dipping into our provident fund contributions for various expenses. However, there are preconditions to be met and procedures to be followed in order to make a withdrawal. The processes and caveats to make withdrawals from your EPF account are detailed below.

What is EPF?

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The question of providing for the future of industrial workers after their retirement or for their dependents, in the event of their premature death, engaged the attention of the Central Government for a long time. This resulted in schemes for instituting provident funds for industrial workers now commonly known by the name Employees’ Provident Fund with a wide scope. Presently, there are three schemes in force for the same

The following three schemes are in operation under The Employees’ Provident Funds and Miscellaneous Provisions Act, 1952:

  • For Retirement Funding – Employees’ Provident Fund Scheme, 1952
  • For Insurance coverage during employment period – Employees’ Deposit Linked Insurance Scheme, 1976
  • For post-retirement pension – Employees’ Pension Scheme, 1995

While the employee salary is deducted towards PF, the amount goes towards these schemes. The employer and government support the employee by contributing their share along with employee share deducted and use it to fund these employee benefit schemes. 

UAN – The magic 3 letter abbreviation 

The Universal Account Number (UAN) is a 12-digit number, allotted to an employee who is contributing to EPF, will be generated for each PF member by EPFO. Earlier, there was confusion due to each employer providing a member ID to the employee resulting in employees having more  than one number to deal with for both contribution and withdrawal over the course of their employment. 

Now, the UAN remains same through the lifetime of an employee and does not change with change of job. The idea is to link multiple IDs allotted to one member to a single UAN. This will help the member to view details of all the Member Identification Numbers (Member IDs) linked to it. The UAN helps in simplification of the process of transfer and withdrawals of claims. 

When can PF be withdrawn?

Subscribers of provident funds can withdraw the balance in their provident fund either fully or partially. The retirement fund body allows withdrawal of money for specific purposes only. There are only three scenarios where the provident fund balance can be withdrawn fully:

1) At the time of retirement (on or after 58 years of age)

Under the rules, anyone can withdraw PF when they reach 58 years of age. However, that is not compulsory. The subscriber and his employer can keep contributing till they want to, in case he decides to work beyond the superannuation age limit.

2) If continuously unemployed for two months or more

If you decide to quit your job for a sabbatical or for entrepreneurship, you can wait till two months (or 60 continuous days) after you quit your job and withdraw the money. To those quitting your job and need cash immediately to meet your monthly financial commitments, EPFO has taken a considerate approach now. At a decision taken at the 222nd central board of trustees’ meeting of EPFO in June 2018, it was decided that subscribers of Employees Provident Fund Organisation (EPFO) who resign from their service can now withdraw 75% of their total provident fund after one month from the date of cessation of service to meet their monthly financial commitments.

3) Death before the specified retirement age

In case of death of the subscriber, the family of the subscriber can withdraw the provident fund balance after furnishing the necessary papers.

Withdrawal of contribution to Pension scheme

Along with the PF, one is also allowed to withdraw the EPS amount if the cumulative period in employment has been less than 10 years. Once this milestone is crossed, the employee compulsorily gets pension benefits after retirement.

Partial withdrawal of PF

PF can be withdrawn even partially in certain specific cases:

1) Marriage & Education

A member is eligible to withdraw 50% of the money from the EPF account for,

  • his or her own marriage, 
  • marriage of his or her daughter, son, sister or brother. 
  • the post-matriculation education of his or her son or daughter

Condition: Member should have completed contribution to EPF for seven years. Can withdraw  no more than thrice for the above purposes.

2) Purchase or construction of a house (including purchase of land)

A member can withdraw money up to 36 times of monthly wages plus Dearness Allowance (DA) for construction of a house. If you are going to only purchase land without construction, the maximum withdrawal amount is 24 times instead of 36. 

Condition: Member should have completed contribution to EPF for five years.

3) Home Renovation

A member can withdraw partially from PF up to a maximum of 12 times the monthly wages when he or she wants to repair or alter the residence. It can be availed twice:

  • Five years from completion of house
  • Ten years from availing the above

Condition: Member should have completed contribution to EPF for five years.

4) Medical purposes

A member can withdraw PF money to the extent of six times the monthly salary (Basic + DA). It is applicable for medical treatment for self, spouse, children, and parents. There is no lock-in period or minimum service period for this type of withdrawal.

5) Repayment of home loans

An EPF subscriber is allowed to withdraw up to a maximum of 90 %, from both employee’s contribution and employer contribution in Employee Provident Fund from the corpus for repayment of outstanding principal and interest towards a home loan under certain conditions. 

Conditions:
To withdraw the amount, at least 10 years of service completion is required. Also, the property should be registered in the name of the employee or spouse or jointly. The withdrawal is permitted subject to furnishing of requisite documents as called for by the EPFO relating to the housing loan availed. Another requirement is that the accumulation in the member’s PF account (or together with the spouse), including the interest, has to be more than Rs 20,000.

6) One year before Retirement

A person can withdraw his or her entire provident fund corpus after completing 58 years of age. The member is allowed to withdraw up to 90% of the provident fund balance one year before retirement.

How many times can you withdraw?

The frequency of withdrawal varies from ground to ground. As per the latest rules,

  • You can make PF withdrawal for marriage not more than three times.
  • Similarly, for post-matriculation education, you can claim for withdrawal of your PF fund for a maximum of three times.
  • If you are purchasing a house/plot or constructing a house then you can claim for PF advance only once.
  • On critical illness/ medical emergency grounds, there is no explicit limit on number of times you can raise a claim for PF withdrawal before retirement.

EPF Withdrawal Forms

At the time of filing a withdrawal claim, you will find three EPF withdrawal forms,

  • PF Advance / Part withdrawal- Form 31 (Online & Offline)
  • Only PF Withdrawal – Form 19 (Online & Offline)
  • Only Pension Withdrawal – Form 10C (Online & Offline)

Composite Claim Form with the above 3 forms (only offline)

Points to Remember before Making PF Withdrawal Claim

You can claim your PF online only if you meet the following conditions,

  • You must be allotted a UAN number and it should be activated
  • Your mobile number must be registered with the UAN
  • Your bank details must be seeded into the UAN
  • Your PAN and Aadhaar should be seeded into the EPFO database

Point to Note: If you are filing a claim online, there is no need to visit the previous employer for verification. However, offline claims still have to be attested by the employer manually. This would be more helpful in cases where people don’t have time to visit offices manually or have relocated to another city or state. 

EPF Withdrawal Portal

EPF withdrawal can be done through the UAN member portal. The member has to first activate his UAN and then login to the portal for online withdrawal. The portal can also be used to transfer funds from their old PF account to a new account. Other online services such as eKYC, contact details update, etc. can also be performed through this portal.

To summarise, you can use the table below

EPF Withdrawal Purpose Withdrawal Limit Reason Minimum Service
Medical Purpose Lower of the
    a)   Total balance or
    b)   6 x monthly salary
Medical treatments of self, spouse, children, and parents are covered under this purpose Nil
Wedding 50% of Employee PF contribution & its interest  His own, siblings or child’s marriage 7
Home Loan Repayment 1.     90% of Total Balance
2.     However, to withdraw the amount, at least 3 years of service completion is required
Repayment of loan on house must be registered in his or her name or held jointly. 5
Home Renovation 12 x monthly salary For renovating / reconstructing a house should be held in his/her name or held jointly with the spouse

Can be availed two times:
a) Five years from completion of house
b) Ten years from availing the above
5
Retirement Total EPF Balance    
Unemployment 75% after 1st month and 25% after 2nd month of unemployment   2 months

Courtesy: paisabazaar


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About Shravana Deepan J R 1 Article
Bio-Shravan is a CA in Practice and Alumni of RKM Vivekananda College, Chennai. He specialises in Audit, Assurance Services and Financial Reporting for Corporates. He is also an avid knowledge gatherer and is the Founder Partner at “X Quiz It”, an Quizzing and Infotainment Company and heads its Content & Research Team.