PF account: When and how much you can withdraw after being jobless
2 min read 14 Mar 2020, 01:59 PM ISTYou can withdraw money lying in your EPF account a month after resigning from serviceYour EPF account withdrawal would be tax-free if you have completed five years of continuous service
PremiumNEW DELHI : The Employees' Provident Fund Organisation (EPFO) allows subscribers, who have subsequently become unemployed, to withdraw funds from their PF accounts. It helps not only those hit by job losses but also those who have taken a sabbatical from work or are trying their luck as a startup entrepreneur.
EPFO rules state that unemployed EPF account holders can avail non-refundable advance up to 75% of their balance after being unemployed for more than a month. You are also not supposed to submit any unemployment-related documents to the EPFO as a pause in EPF deposits is considered a sign of unemployment.
The advantage of taking an advance is that your PF account membership remains intact allowing you to transfer your remaining balance to a new employer. If your account is active, you can also draw pension at the time of retirement.
If you continue to remain jobless for two months, you can then withdraw you entire PF corpus and close your EPF account. The requirement of 2 months of waiting period, however, does not apply to women who resign from job to get married, according to an EPFO order.
Those who have crossed the age of 54 years are allowed to withdraw up to 90% of their PF balance at any time after crossing 54 years but within one year of retirement on superannuation, whichever is later.
Income tax on EPF withdrawal
ClearTax founder and CEO Archit Gupta said if the EPF withdrawal happens after 5 years of continuous service, the amount withdrawn (both principal and interest) is exempt from tax. In case the withdrawal happens before completion of 5 years of continuous service, it is fully taxable.
"However, a withdrawal made before 5 years due to the ill health of the employee or discontinued business of the employer or for any other reason beyond the control of the employer, the same is exempt from tax," Gupta told Livemint.
How to withdraw from EPF account
You can file a withdrawal claim using your UAN on the EPFO portal. Before you do this, make sure that the UAN has been activated and that the bank details and KYC documentation has been updated on the portal, BankBazaar CEO Adhil Shetty said.
1) Login to EPFO's unified portal with your UAN and password.
2) On the ‘Our Services’ tab, select the ‘Claim’ option from the drop-down list.
3) You will find three types of withdrawal claim — full withdrawal, partial withdrawal, or pension withdrawal — in ‘I Want to Apply For’ section. The drop-down box with types of withdrawal will be displayed only if you are eligible to avail it.
There are two types of forms for withdrawal:
Aadhaar-based composite claim form can be used if your Aadhaar number and bank account are linked with your UAN. You must complete the KYC by submitting Form-11.
Non-Aadhaar based composite claim form requires attestation of the form by the employer, unlike Aadhaar based claim which can be made without employer’s attestation.
4) The PF amount will be credited directly to your bank account after it is approved.
