What Is EPF?
Employees Provident Fund ( EPF) is the central scheme under the EPF Act passed in 1952. Under EPF, the employee contributes 12% of their basic salary, and the employer also contributes equally.
On retirement, the employee gets a lump sum amount that includes their contribution and the employer’s contribution and interest accrued annually. Employee Provident Fund is managed by the Employee’s Provident Fund Organization (EPFO).
Employees can make an EPF withdrawal of the whole sum accumulated in their PF upon their retirement. However, employees can make withdrawals earlier on fulfilling certain conditions laid down in detail within this article.
It is important to note that the Employees’ Provident Fund Organization has assigned UAN (Universal Account Number) for all the employees who come under the Act. The EPFO links the UAN to the employee’s EPF account. The UAN is to be used throughout the lifetime of an employee. It is issued for a lifetime, which means that there is no need to apply for an EPF transfer, even in a job switch.
Also Read: UAN Registration & Activation
When Can EPF Be Withdrawn?
- You may withdraw EPF in part or whole. You can fully withdraw it in any of the following circumstances:
- When you retire or,
- When you have been unemployed for more than two months, you can make the withdrawal by getting the form attested from a gazetted office.
- The list of gazetted officers includes (but is not limited to) Tahsildars, magistrates, police officers, Lieutenant Colonel and above, BDO, patent examiners, lecturers in Government colleges, principals of Government high schools, junior doctors in Government hospitals, etc.
- It is against EPF’s rules and regulations to completely withdraw EPF between leaving one job and joining another. Employees can withdraw EPF if they are without a job for more than 2 months.
When Can Partial Withdrawal From EPF Be Made?
A person may also be allowed to make a partial EPF withdrawal in a few situations upon meeting certain conditions. The circumstances in which an individual is allowed to make a partial EPF withdrawal are mentioned below.
|Sl. No.||Reasons for withdrawal||Limit for withdrawal||No. of years of service required||Conditions to be fulfilled|
|1||Medical reasons||Lower of the Two;
Six times the basic pay per month or the total employee’s contribution along with interest.
|NA||Medical treatment for employee, spouse, children and parents.|
|2||Marriage||Up till 50% of employee’s share of contribution.||7 years||For the marriage of account holder, their son/daughter, or their brother/sister.|
|3||Education||Up till 50% of employee’s share of contribution.||7 years||Either for the employee’s education or their child’s education (after matric. )|
|4||Purchase of land or purchase/ construction of a residential property.||For land – Up till 24 times of basic salary plus dearness allowance per month.
For residential property – Up to 36 times of basic salary plus dearness allowance each month.
The limitations above are on the total cost.
|5 years||1. The capital asset, which is the land or the house, must be registered in the account holder’s name or jointly with the spouse.
2. You can withdraw it only once for this purpose during the whole time of the employee’s service.
3. The construction of the property should begin within 6 months of the first withdrawal. You must complete it within 12 months from the last instalment.
|5||Repayment of housing loan||Least of below:
||10 years||1. The property should be held in the employee’s name or the employee’s spouse or jointly with the spouse.
2. Withdrawal is permitted provided the documentary evidence as required by the EPFO relating to the housing loan
3. The accumulation in the employee’s PF account (or jointly with the spouse), inclusive of the interest, has to be above Rs 20,000.
|6||Renovation of house||Least of the following:
Up till 12 times the wages and dearness allowance per month, or
Employees contribution and interest, or
|5 years||1. The property should be in the employee’s name or the spouse or be jointly held with the spouse.
2. The facility can be made use of, twice in the period of service:
a. Upon 5 years of the completion of the house, or,
b. Upon the completion of 10 years of the house
|7||Partial withdrawal before tenure||Upto 90% of accumulated balance and interest.||Once the employee reaches the age of 54, the employee should withdraw within one year of retirement or superannuation.|
Also Read: PF Calculator – Calculate EPF Online
What Is The Procedure For EPF Withdrawal?
There are two methods by which the employee can make EPF withdrawal.
- The employee may submit a physical application.
- The employee may submit an online application.
Let’s look at it in detail.
Submission of a physical application for EPF withdrawal
- The first and foremost step would be to get the new composite claim (Aadhaar), or the composite claim form (Non-Aadhaar) downloaded from the EPFO website. The following image has been provided for reference.
- The second step is to fill up the forms. The new composite claim form (Aadhaar) must be filled and submitted to the respective jurisdictional EPFO office. It does not require the attestation of the employer.
- However, the composite claim form (Non-Aadhaar) should be filled up and submitted to the jurisdictional EPFO office with the employer’s attestation.
- The number of certificates and documents are relaxed for partial EPF withdrawals under the circumstances in the table above. The relaxation means that the choice of self-certification has been brought in for all the EPF subscribers.
Submission of an online application for EPF Withdrawal
Who doesn’t love the option of doing things online from the comfort of their home? It is precisely why the EPFO has now very recently introduced the facility of online withdrawal. Unsurprisingly this has made the whole process of EPF withdrawal more comfortable and easy. It consumes much less time than before as well.
Making an online application for EPF withdrawal :
For making an online application for partial withdrawal online, an individual must meet the following two conditions.
- UAN (Universal Account Number) is activated, and the mobile number linked to it (used for activating UAN) is working and reachable.
- UAN is linked with their KYC (i.e. Aadhar, PAN card and relevant bank details, including the IFSC code).
If the said conditions are fulfilled, the employee doesn’t need the previous employer’s attestation for carrying out the withdrawal.
What Are The Steps To Apply For EPF Withdrawal Online?
Apply for withdrawal in 10 easy steps.
- Step 1: Go to the UAN portal online.
- Step 2: Log in to it using your UAN and password. After that, enter the captcha that is displayed.
- Step 3: The next step would be to click on the ‘Manage’ tab. Then select KYC to ensure that all your KYC details, such as Aadhaar, Pan and bank details, and IFSC code are accurate and verified.
- Step 4: Upon verifying the KYC details, find the ‘Online Services’ tab, and from the drop-down menu, find the option ‘Claim (Form – 31,19 & 10C).
- Step 5: The ‘Claim’ screen will show you the details of members, KYC details and other service details. Go through them. Then enter the last four digits of your bank account number to verify.
- Step 6: Click on ‘Yes’ to sign the certificate of the undertaking.
- Step 7: After this step, click on ‘Proceed for Online Claim’.
- Step 8: In the claim form, under the tab ‘I want to Apply For’, choose the claim you want to apply for, i.e., full settlement, EPF part withdrawal (as a loan or advance) or pension withdrawal.
Suppose the individual is ineligible for any of the above services, like part withdrawal or pension withdrawal, based on the service criteria selected. In that case, such an option will not even be displayed to them in the drop-down menu.
- Step 9: After the above steps, click on the ‘PF Advance (Form 31)’ to withdraw the fund. To do so, the person making the EPF withdrawal has to list out the purpose for such advance, the amount of withdrawal they are seeking to make and the employee’s address.
- Step 10: Finally, the person may submit the application by clicking on the certificate. The website may require them to upload scanned documents as proof for the application filed.
The money gets credited to the person’s account only after the employer approves the said request. It takes 15-20 days on average for the money to get credited to the bank account.
How to Apply for Home Loan Based on EPF Accumulation?
To avail of a home loan based on the EPF account balance, you need to:
- Step 1: The home loan should be applied via the housing society to the Employee Provident Fund Commissioner. Use the format in Annexure 1 for that.
- Step 2: A certificate will be issued by the EPF Commissioner displaying the monthly contributions to the applicant’s account over the past three months. The applicant also can take a printed copy of their EPF passbook to show the contributions made over the immediately preceding three months.
- Step 3: The individual may either opt for a total amount withdrawal or payout in instalments.
- Step 4: The payment is made directly to the housing society by the EPFO.
Frequently Asked Questions:
Are EPF contributions eligible for tax deductions?
Yes. The 80C deductions of the IT Act, 1961, allow the contributions to be deducted.
Can I increase my EPF contributions?
Yes, You can increase EPF contributions. Employees may contribute as much as 100% of their basic salary and is called Voluntary Provident Fund or VPF.
Should the employer also contribute a higher amount when the employees increase their contribution?
No, even as the employee opts to go for the Voluntary Provident Fund, the employer’s contribution shall continue to be the same and needn’t increase contribution to match the employee’s.
Whether employer’s permission is required for EPF withdrawal?
No, according to the recent amendments, the employee does not require the employer’s permission for EPF withdrawal.
Can premature EPF withdrawals be made from the EPF?
Yes, in some situations, an employee may make premature EPF withdrawals with supporting documents.