EPF Withdrawal & Taxation New Rules Before & After 5 years [2017]

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The Employees Provident Fund is a retirement savings scheme. Every month, both the employee and the employer make a contribution to the employee’s EPF account. Here we will discuss the EPF withdrawal rules for complete and partial withdrawals.

Complete Withdrawal of EPF Account

You can withdraw your PF account only in the following cases:

• If you have no job.
• If 2 months have elapsed since your last employment.

Note – Withdrawing your PF account between switching jobs is illegal. Sometimes, people withdraw their PF account at the time of leaving an organisation fearing a tedious claims process. But not only is this illegal, it is also not advisable from an investment point of view. If you withdraw your PF account, you cannot avail of its savings benefits and facilities (for example – tax-free interest). Therefore, instead of withdrawing, you should transfer your PF account. The introduction of UAN (Universal Account Number) has greatly simplified this process.

Partial Withdrawals from EPF Account

A salaried employee can withdraw money from his or her EPF account for various purposes. However these withdrawals are subject to certain eligibility criteria, rules, and conditions.

The purposes for which you can make withdrawals from your EPF account, along with the eligibility criteria, and amount of withdrawal allowed are as follows:

1. Marriage

• Withdrawals are allowed for self, siblings, and children.
• You should have completed a minimum of 7 years of service.
• You can withdraw 50% of contribution thrice in your career.

2. Medical Treatment

• You can withdraw up to either six times of your monthly salary or total corpus for medical treatment.
• Withdrawals are allowed for self, parents, spouse and children.

3. Construction/Purchase of Plot

• To withdraw from your EPF account for construction or purchase of a plot, the property must be registered in your name, your spouse’s name, or be jointly held.
• For purchase, you can withdraw an amount which 24 times your salary.
• For construction, you can withdraw an amount which is 36 times your salary.
• You should have completed a minimum of 5 years of service.
• You can withdraw for this purpose only once in your career.

4. Home Loan Repayment

• To withdraw from your EPF account for home loan repayment, the property must be registered in your name, your spouse’s name, or be jointly held.
• You should have completed a minimum of 10 years of service.
• You can withdraw up to 36 times your salary.

5. House Renovation/Alteration

• To withdraw from your EPF account for house renovation/alteration, the property must be registered in your name, your spouse’s name, or be jointly held.
• You should have completed a minimum of 5 years of service.
• You can withdraw up to 12 times your monthly salary.

6. Retirement

• For partial withdrawal before retirement, you must be 54 years old.
• You can withdraw 90% of the corpus of your PF amount.

7. Miscellaneous

You can withdraw from your EPF account for various other reasons such as –

• Premature retirement as a result of any physical or mental disability.
• Migrating abroad for better employment.
• Settling down in a foreign country.

What are the taxation rules regarding withdrawals from EPF account?

• There will be no tax deduction on the withdrawal amount for withdrawals made after 5 years of continuous service or above.
• For withdrawals made before the completion of five years of continuous service, the withdrawal amount will be taxable.
• PF withdrawals which are taxable will attract TDS deduction at the rate of 10% (if PAN card is registered) or up to a maximum of 30% (if PAN card is not registered).
• No TDS will be deducted for withdrawal amounts less than Rs.30,000.
• In case your income is less than the basic exemption limit even after the addition of the provident fund withdrawal amount, you can submit form 15G at the time of withdrawal.  If you do not submit your PAN card, TDS will be deducted at 34% on the withdrawal amount.
• If you are a senior citizen, and want to avoid TDS, you can submit form 15H. Or you can submit form 15G for amounts up to Rs.3 lakh and Rs.2.5 lakh respectively. (These two forms are declaration forms which can be used if your income is less than the taxable amount).
• TDS is not be deducted in the following cases –

1. Transfer of PF account.
2. Termination of an employment contract as a result of health concerns,or discontinuation of a business venture by the employer.
3. Any other cause which is not in the domain of the employee.

How to resolve grievances related to EPF withdrawals?

You can resolve grievances online by following these steps:

1. Log on the EPF Grievance Management System website.
2. Click on ‘REGISTER GRIEVANCE‘.
3. Fill up the form by entering all the details, and then click on ‘Submit‘.
4. You can also check your claim status from this website.

These are the rules and regulations related to withdrawal from a PF account. It is important for all salaried employees registered under the EPF scheme to stay updated on them.