The Employees' Provident Fund Organisation (EPFO) provides a compulsory savings plus retirement scheme for employees, known as the Employees' Provident Fund (EPF). The organisation is responsible for regulating and managing provident funds in India under the Ministry of Labour and Employment. In May 2024, the organisation declared EPF new rules to make things easier for EPF members. The major changes include faster death claims, multi-location claim settlement, and extended auto-settlement facility.
The EPFO's new guidelines aim to avoid premature withdrawals by encouraging members to stay invested in the scheme. Moreover, they make PF fund access easier for subscribers during financial emergencies:
Auto-Settlement Facility: The EPF rules facilitate auto-settlement for housing under Rule 68B. Rule 68K also provides auto-settlement for marriage and education. Additionally, EPF's new rules 2024 extend the auto-settlement facility for medical conditions under Rule 68J.
Multi-Location Claim Settlement: The EPFO has set up a link office for multi-location claim settlements. Its primary aim is to minimise delays in settling claims across India.
Faster Death Claims: In death cases, physical claims without Aadhaar seeding will be possible temporarily. However, the OIC must confirm the deceased person's membership and the claimant's genuineness.
According to the EPF withdrawal new rules, employees do not require the employer's attestation for PF withdrawal if they seed their Aadhaar card details with their UAN account. They can make a withdrawal claim online on the EPFO member portal, or offline by following the steps mentioned below.
Those who are not very comfortable with the online process may withdraw their EPF funds offline:
Visit your respective EPFO office
Request a Composite Claim Form
Fill out the form carefully and submit it at the office with relevant documents
There are two types of Composite Claim Forms: Aadhaar and Non-Aadhaar. The Aadhaar form requires the employer's attestation. The non-Aadhaar does not require attestation from the employer. After filling out the relevant form, you must submit it to your jurisdictional EPFO office.
Documents Required for PF Withdrawal
Furnish the following documents to claim withdrawal under the EPFO's new pension rules:
Composite Claim Form
Address Proof
Identity Proof
Two revenue stamps
Bank account statement in the EPF holder's name
One blank and cancelled cheque with visible IFSC and account number
Personal details like Father's Name and Date of birth
ITR Forms 2 and 3 for EPR withdrawals before completing five years of continuous service
Tax-Free Limit for PF Withdrawals
While a part of the employee's salary contributed to the EPF is tax-exempt, certain rules still apply to the taxation rules:
If the employee withdraws more than Rs 50,000 before five years of continuous service, it will attract 10% TDS after providing PAN. Otherwise, 30% TDS plus tax is applicable.
No TDS deduction after providing Form 15G/ 15H
No TDS deduction if the employee withdraws after completing five years of continuous service
No TDS deduction for EPF funds transfers to NPS
Types of PF Withdrawals
PF Final Settlement
An EPF member can withdraw 100% of the corpus only at retirement. They can also transfer funds from their EPF account to their NPS account to receive a regular pension. However, 100% PF corpus withdrawal is also possible if the person stays unemployed for over two months.
PF Partial Withdrawal
Partial withdrawals are permissible only for certain unavoidable reasons such as medical emergencies, weddings, home loan repayment, home renovation, or unemployment below two months.
Pension Withdrawal Benefit
EPF has an EEE status, which means all contributions, withdrawals, and earnings are tax-exempted. However, TDS is deductible upon premature EPF funds withdrawal.
Criteria for PF Withdrawal
When An Employee Is Still Under Service
Submit composite claim form for taking advance from the PF account
Submit Form 14 for financing LIC policy through the PF account
Claim pension fund after crossing 58 years of age
Submit form 10D to receive a monthly pension after completing ten service years
Submit a composite claim form if ten years of service are not yet complete
When An Employee Switches Job
Submit Form 13 for EPF account transfer
If the employee leaves a job but does not join another
Use a composite claim form to make a pension fund claim
After 58 years of age, make a PF claim using a composite claim form and form 10D after completing ten service years
When An Employee Leaves An Establishment Due To A Physical Disability
Use a composite claim form to claim the PF
Use Form 10D to make a pension claim
After 58 years of age, make a PF claim using a composite claim form without completing ten service years
When An Employee Is Deceased While In Service
Before 58 years, the nominee, heir, or beneficiary can claim PF settlement using Form 20, EDLI using Form 5IF, and monthly pension using Form 10D
After 58 years and completing ten service years, the nominee, heir, or beneficiary can claim using relevant forms
After 58 years but not completing ten service years, the nominee, heir, or beneficiary can claim using relevant forms
When An Employee Is Deceased
Before 58 years, the nominee, heir, or beneficiary can claim PF settlement using Form 20 and pension amount using Form 10D
After 58 years and completing ten service years, the nominee, heir, or beneficiary can claim using relevant forms
After 58 years but not completing ten service years, the nominee, heir, or beneficiary can claim using relevant forms
Reasons for PF Withdrawal
EPF members can withdraw their corpus partially or completely only under certain conditions. They must specify their reason for PF withdrawal to comply with the EPF withdrawal new rules:
Medical emergency
Home loan Repayment
Wedding
Home Renovation
Unemployment
Limits of EPF Partial Withdrawal
Purpose
Withdrawal Limit
Medical emergency
Total corpus or six times the monthly salary, whichever is lower
Home loan Repayment
Up to 90%
Wedding
Up to 50%
Home Renovation
12 times the monthly salary
Unemployment
75% after one month of unemployment 25% after 2nd month of unemployment
Retirement
100%
Can I Withdraw EPF for Planned or Unplanned Expenses?
EPF withdrawals are strictly allowed for specific purposes, such as home purchase or construction, wedding, medical illness, etc. Instead of withdrawing EPF funds, opting for a Personal Loan from Hero FinCorp can be a better solution:
Although EPF's new rules 2024 have made withdrawals easier than before, you should avoid withdrawing funds before retirement. That is because early withdrawals reduce the EPF scheme benefit in terms of corpus and taxes. Instead, you can borrow a Personal Loan from Hero FinCorp to cover various expenses and repay the amount in easy EMIs.
Frequently Asked Questions (FAQs)
When will an EPF withdrawal become taxable? EPF withdrawal becomes taxable if the member withdraws funds before completing five years of continuous service.
Can EPF be withdrawn at any moment? EPF withdrawal is possible only under a few conditions, such as home purchase or construction, wedding, medical illness, etc.
Why can't I withdraw my EPF balance while working? The primary objective of EPF is to save for retirement and encourage long-term investment in the scheme. You can withdraw your EPF balance while working, but only for specific reasons.
Can I withdraw my full PF amount before I retire? You can withdraw 100% of the PF corpus before retirement if you stay unemployed for more than two months.
Is it possible to claim EPF without using the EPF portal? You can claim EPF offline by visiting your respective EPFO office and submitting a Composite Claim Form.
Disclaimer
The information provided in this blog post is intended for informational purposes only. The content is based on research and opinions available at the time of writing. While we strive to ensure accuracy, we do not claim to be exhaustive or definitive. Readers are advised to independently verify any details mentioned here, such as specifications, features, and availability, before making any decisions. Hero FinCorp does not take responsibility for any discrepancies, inaccuracies, or changes that may occur after the publication of this blog. The choice to rely on the information presented herein is at the reader's discretion, and we recommend consulting official sources and experts for the most up-to-date and accurate information about the featured products.
Katyaini is a finance expert with a focus on the non-banking financial sector, bringing over 8 years of experience in NBFC. She specializes in simplifying complex financial concepts for readers, helping them navigate the NBFC landscape. Outside of work, she is passionate about travelling.