Understanding Employee Provident Fund (EPF) and Its Withdrawal Rules

The Employees’ Provident Fund (EPF) is a retirement savings scheme where both the employer and employee contribute every month to ensure financial security after retirement. The scheme is regulated by the Employees' Provident Fund Organisation (EPFO), aiming to provide financial stability to workers.

Although EPF is primarily meant for retirement, employees can also withdraw a portion of their deposits in certain situations, such as medical emergencies, home loans, marriage, or education expenses. Let’s explore the withdrawal rules and conditions for EPF.

EPF Withdrawal Rules & Conditions

1. Withdrawal in Case of Unemployment

• If an individual is unemployed for at least one month, they can withdraw up to 75% of their EPF balance.
• If the unemployment period extends to two months or more, the employee is allowed to withdraw the entire amount.

2. Premature Withdrawal & Tax Implications

• Tax Deducted at Source (TDS) applies if the withdrawal is made within five years of account opening.
• If the withdrawn amount is less than ₹50,000, no TDS will be deducted.
• If the amount exceeds ₹50,000, TDS will be applicable:
  • 10% TDS if the individual provides their PAN card.
  • 30% TDS if PAN card details are not provided.

3. EPF Transfer When Changing Jobs

• Employees do not need to immediately transfer their PF balance when changing jobs.
• The transfer process starts automatically once the Universal Account Number (UAN) is activated and the necessary documents are submitted.

4. EPF Withdrawal After Retirement

• Under the EPF Act, members can apply for their final settlement claim at the age of 58 upon retirement.
• If the employee has completed at least 10 years of service, they become eligible for Employees’ Pension Scheme (EPS) benefits.
• If an individual retires before completing 10 years of service, they can withdraw both their EPF and EPS balance.
• No tax is levied on the amount withdrawn after retirement.

5. EPF Withdrawal for Home Loan Repayment

• Employees can withdraw funds from their EPF account after three years of opening it for home-related expenses.
• As per Paragraph 68-BD of the EPF Scheme, 1952, members can withdraw up to 90% of their accumulated EPF balance for:
  • Buying a new house
  • Paying home loan EMIs
  • Making a down payment for a home loan

Final Thoughts

The EPF withdrawal rules provide flexibility for employees to access their savings when needed. However, early withdrawals come with tax implications, and it is advisable to keep EPF savings for retirement security. Employees should stay updated with EPFO guidelines to make informed financial decisions.

For the latest updates on EPF withdrawal policies and regulations, follow official EPFO notifications.