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Employees’ Provident Fund (EPFO) account is not only considered to be the biggest financial support in old age for salaried employees, but it also plays the role of a reliable emergency fund in times of emergency financial needs. Often, at the time of major expenses like marriage, higher education of children, treatment of serious illness or buying a house, employees need to withdraw advance from the PF account. However, many times there is a big confusion in the minds of shareholders whether they can withdraw the entire amount deposited in their account or whether the government has set a fixed limit for it. If you have a total balance of Rs 1 lakh in your EPF account, then according to the latest rules of the Employees Provident Fund Organization (EPFO), the maximum amount you can transfer to your bank account is Rs 25,000, Rs 50,000 or Rs 75,000. It is very important for every salaried person to understand the mathematics. From corporate offices in Lucknow’s Gomti Nagar and Hazratganj to crores of employees working in industrial areas across the country, EPFO has made the withdrawal rules more transparent and easier than ever.
As per the general advance withdrawal rules of the Employees’ Provident Fund Organization, any working subscriber can withdraw only a maximum of 75 percent of his total eligible PF balance as non-refundable advance. This simply means that if you have a total fund of Rs 1 lakh deposited in your PF account, then you can apply for a maximum withdrawal of up to Rs 75,000 at a time. The remaining 25 percent i.e. Rs 25,000 is kept ‘protected’ or compulsorily safe in the account. EPFO has made this arrangement so that the employee’s hands are not completely empty at the time of retirement and the annual compound interest of 8.25 percent fixed by the government continues to be received on the remaining amount. As long as the employee is in service, 100% withdrawal of the entire Rs 1 lakh is not allowed except in special circumstances.
If an employee or his dependent family members (parents, spouse or children) faces a medical emergency due to a sudden serious illness or hospitalization, EPFO rules prove to be the most flexible. Under medical emergency (Form 31 – Illness), the employee can claim to withdraw an amount equal to his entire contribution and interest received on it. In the total balance of ₹1 lakh, if the combined contribution of the employee and employer falls within the eligibility scope, the required amount of ₹75,000 or more can be sanctioned immediately for the treatment of the patient. Not only this, EPFO, while upgrading its IT system, has increased the limit for auto-mode claim settlement from Rs 1 lakh to Rs 5 lakh for priority reasons like medical and education. Under this, if your KYC and Aadhaar seeding is complete, then the money is directly credited to your bank account within just 3 to 4 working days of applying.
If you want to withdraw money from PF account for your own marriage, marriage of brother or sister or higher education of son or daughter, EPFO has set different eligibility criteria for this. To avail benefits in this category, it is mandatory for the employee to have completed at least 7 years of continuous service in EPFO. For the purpose of marriage and education, you can withdraw only a maximum of 50 percent of your total employee contribution. For example, if in your total account balance of Rs 1 lakh, your own contribution is Rs 50,000 and the rest is the company’s share, then you will be able to withdraw a maximum of Rs 25,000. If your own contribution is Rs 1 lakh, you will be authorized to withdraw an amount of Rs 50,000 directly. Such partial withdrawals are allowed only a maximum of three times in a lifetime in the name of marriage or education.
Buying or building a house is the biggest dream of every working person and EPFO provides the most generous withdrawal options to fulfill this dream. For residential purposes—like buying a new house, booking a flat, purchasing a plot or renovating an old house—employees become eligible to withdraw up to 90 percent of their total PF balance after completion of at least 5 years of service. In this special category, if you have Rs 1 lakh in your account, you can withdraw up to Rs 90,000 with special permission, surpassing the normal limit of Rs 75,000, provided the property is registered in your name or your spouse’s name. This provision can also be used to repay the principal amount of home loan taken from the bank, which helps a lot in reducing the monthly debt burden.
If for some reason you lose your job or become unemployed, the rules for PF withdrawal are completely different from the rules you get while in service. Under EPFO rules, you can withdraw 75 percent of your PF account i.e. ₹ 75,000 immediately after one month of leaving the job. If you do not join any new job for two consecutive months and remain unemployed, then you get legal permission to withdraw the remaining 25% i.e. the entire Rs 1 lakh in your account (Full & Final Settlement). Apart from this, if the employee retires after completing the age of 58 years or decides to settle abroad permanently, then he can withdraw his entire 100 per cent of his PF and pension (EPS) deposits together without any restriction.
It is equally important to understand the tax rules while withdrawing money from PF account. If you have completed 5 years of continuous service, any amount withdrawn is completely income tax free. But if your total employment is less than 5 years and you are withdrawing more than Rs 50,000, then TDS is deducted on it. If your PAN card is duly linked to the EPF account and UAN, then TDS will be deducted at the rate of 10 percent. If PAN is not linked, huge tax deduction up to the maximum marginal rate i.e. 34.6 percent can be done. So if your total income is below the taxable limit, never forget to upload Form 15G or Form 15H for senior citizens with online claim to avoid TDS.