If you’re a working professional in India, chances are you have an Employees’ Provident Fund (EPF) account. The EPF scheme is a great way to save for retirement, with both you and your employer contributing 12% of your basic salary each month. But did you know that there are specific rules for withdrawing funds, especially in emergencies or before retirement? Let’s break down the latest EPF withdrawal rules to help you access your savings without confusion.
Early Withdrawals Before Retirement
EPFO has made provisions for members to withdraw a portion of their EPF funds before retirement in specific situations. You are allowed to withdraw 90% of your total EPF savings one year before retirement, but only if you are at least 54 years old. This means that you can access a significant portion of your retirement savings if you are close to your retirement date and in need of funds.
Withdrawals in Case of Unemployment
One of the most important updates concerns those who lose their jobs. If you become unemployed before reaching retirement age, you can withdraw 75% of your EPF savings after one month of unemployment. The remaining 25% can be transferred to a new EPF account once you find new employment.
In cases where someone faces retrenchment or a prolonged period of unemployment, the EPF provides much-needed financial relief.
Partial Withdrawals for Emergencies
EPFO allows partial withdrawals for various emergencies such as medical treatment, higher education, or buying a house. The amount you can withdraw is the lower of three months’ basic salary plus dearness allowance or 75% of your total EPF balance. This rule ensures that employees can access their savings in times of need, while also preserving their retirement corpus.
Tax and TDS on Premature Withdrawals
Tax implications on EPF withdrawals are also something to keep in mind. If you withdraw EPF funds before completing five continuous years of service, TDS (Tax Deducted at Source) will be applicable:
- If the withdrawal amount exceeds Rs. 50,000, TDS will be deducted.
- TDS is charged at 10% if you provide your PAN, but if you fail to submit PAN, the deduction will be higher, at 30%.
- No TDS will be deducted if the withdrawal amount is below Rs. 50,000.
Tax Exemptions After Five Years
EPF withdrawals become more beneficial after five years of continuous service. If you’ve contributed to your EPF for at least five years, your withdrawals are tax-free. This makes it important for employees to stay with the same employer or continue contributing to EPF to enjoy this tax benefit.
How to Check EPF Balance and Withdraw Online
You can easily check your EPF balance and apply for withdrawals online through the EPFO portal. If your UAN (Universal Account Number) is linked with Aadhaar and your employer has verified it, you can access your account directly. This online facility simplifies the process, making it easier for employees to manage their funds.
To withdraw your EPF, you’ll need to declare your unemployment status if you’re between jobs. As per the new rules, 100% withdrawal of EPF is only allowed after two months of unemployment.
By staying informed about these rules, you can ensure that you have smooth access to your EPF funds whenever needed, whether it’s for emergencies or planning for retirement.
