EPF Withdrawal Rules: Guide to Provident Fund Withdrawals in India

The Provident Fund (PF), also known as the Employee Provident Fund (EPF), is a retirement savings scheme for employees in India. Both employees and employers contribute a fixed percentage of the employee's salary - typically 12% each - towards the fund every month. The amount in EPF accounts earns interest annually. 

Now, withdrawals from the EPF are regulated to ensure the funds primarily serve their purpose of providing financial security post-retirement. However, withdrawals are permitted under certain conditions as specified by the Provident Fund withdrawal rules. The withdrawals from EPF are regulated to ensure the funds primarily serve their purpose of providing financial security post-retirement. 

This article will guide you through the PF withdrawal rules, the online PF withdrawal process, and how to manage the necessary documentation.

Withdrawal of Provident Fund: Key Regulations

There are three primary types of EPF withdrawals:

Final Settlement: This occurs when an employee retires or resigns. They can withdraw the full accumulated amount in their EPF account.

Partial Withdrawals: These are allowed under specific conditions such as medical emergencies, higher education, marriage, or home purchase.

Pension Withdrawal Benefit: This applies when an employee reaches the age of 58 or 50 (in case of early retirement), with at least 10 years of service, allowing them to receive a monthly pension.

EPF Withdrawal Rules 2024

Here are the basic withdrawal rules that one must adhere to:

• Employees cannot withdraw from their EPF while they are still employed. Partial or full withdrawals are allowed only under certain circumstances, such as unemployment for over one month.
• If unemployed for one month, individuals can withdraw up to 75% of their EPF balance. The remaining 25% is transferred to the EPS account on joining a new job. However, in case of unemployment for two months, the person can withdraw the remaining 25%.
• Withdrawals exceeding Rs 50,000 within five years of opening the EPF account attract TDS at 10% with a PAN card and 30% without one.
• Employees can take loans against their PF savings after a certain number of years in service.
• It is not mandatory to withdraw the PF balance when changing jobs. The balance can be transferred if the Universal Account Number (UAN) is active, and the necessary forms are submitted.
• The full EPF balance can be withdrawn if the individual has been unemployed for at least two months or if the gap between jobs is over two months.
• You can withdraw up to 90% of the EPF corpus one year before retirement, provided the individual is at least 54 years old.

Common Reasons for Provident Fund Withdrawal

There are several valid reasons why one might need to withdraw from their Provident Fund. These include unemployment, medical emergencies, education, marriage, and purchasing residential property or land plots. Below are the specifics for each reason:

In Case of Unemployment: In case an individual is unemployed for over a month, they can withdraw up to 75% of their EPF balance. If the unemployment period exceeds two months, the remaining 25% can also be withdrawn.

For Medical Emergencies: EPF members can withdraw funds for medical treatments without needing to complete a specific service period. This includes treatments for serious illnesses such as cancer, heart surgery, and more. The withdrawal limit is usually the employee’s share with interest or six times the monthly basic salary, whichever is lower.

For Education: Members can withdraw up to 50% of their EPF contributions for their or their children’s education, provided they have completed at least seven years of service. This can be utilised for post-matriculation educational expenses.

To Pay for Marriage: PF funds can be withdrawn for marriage expenses for self, siblings, or children. Employees who have completed at least seven years of service can withdraw up to 50% of their share of the contribution with interest.

To Purchase Residential Property or Land Plots

Employees who have completed five years of service can withdraw funds to purchase a residential property or land. The PF withdrawal limit for the purchase of a house is up to 36 times the monthly basic salary plus dearness allowance. Meanwhile, the withdrawal limit for the purchase of land is up to 24 times the monthly basic salary plus dearness allowance. The limits are restricted to the total cost. 

Further, the withdrawal is permissible if the house or land is in your name or jointly with the spouse. Also, such withdrawal is allowed only once during the service period.

For home loan repayment

EPFO requires that the employee has been in service for over 10 years. The withdrawal limit is the lesser of:

• up to 36 times the monthly basic salary plus dearness allowance, 
• total corpus including employer and employee contributions with interest 
• total outstanding principal and interest on the housing loan. 

The property must be registered in the employee’s name, their spouse’s name, or jointly. Additionally, the PF corpus, either individually or combined with the spouse, must exceed ₹20,000. 

For home renovation

The employee must have been in service for at least five years. The withdrawal limit is the lesser of the following

• up to 12 times the monthly basic salary plus dearness allowance, 
• the employee’s contribution plus interest
• the total renovation cost. 

Withdrawal for renovation can be claimed twice – after five years of home completion and again after ten years. 

Documents Required for EPF Withdrawal

To withdraw from your EPF account, you will need the following documents:

• Aadhaar Card linked with UAN
• PAN Card (To avoid TDS on withdrawals)
• Bank Account Details

Grievance Portal for PF Withdrawal

If you encounter issues with your PF withdrawal process, the EPFO provides a grievance portal. This platform allows employees to lodge complaints and track their resolution status. Visit the EPFO's official website and navigate to the 'EPFiGMS' (EPF I Grievance Management System) to file your grievance.

Lowering Tax Burden on EPF Withdrawal

An account holder can also mitigate their tax liability on premature PF withdrawals. Typically, withdrawals attract TDS. However, as per the revised EPF withdrawal rules 2024, withdrawals made after a minimum of five years of service will not incur TDS.

Here’s a detailed explanation regarding the tax implications of the withdrawal of EPF:

• Withdrawals before the completion of five years of continuous service attract TDS only if the withdrawal amount exceeds ₹50,000. No TDS is applicable in case the withdrawal amount is less than ₹50,000.
• TDS of 10% is applicable if PAN is provided, otherwise it is 30% in case the PAN is unavailable. 
• No TDS will be deducted if the employee furnishes Form 15G/15H.
• Withdrawals after five years of continuous service are exempt from TDS. 
• Interest earned on EPF contributions is subject to tax after retirement as per the marginal tax rate.

Conclusion

The Employee's Provident Fund has always been a popular savings scheme, offering the ability to transfer one's EPF account via the UAN and the benefit of earning interest on the balance for up to three years without additional contributions. The new withdrawal rules enhance these benefits, making the system more advantageous for those employed in the organised sector, allowing them to access funds in times of need.