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New rules of EPFO: Every employed person has a PF account. This amount is a facility for your retirement. You can take advantage of this fund after retirement. However, many people withdraw a small amount of PF for works like buying homes, getting married. You cannot withdraw the entire amount of PF, as we all know. But the central government is preparing to make major changes in the rules of Employees Provident Fund EPF soon. With this, the employed class will be able to withdraw a large amount from its provident fund PF.
According to the new proposal, now you will not have to wait for retirement (58 years) or unemployment to withdraw the entire amount of PF. That is, you will be able to withdraw the entire amount of your PF account even while in the job. If this proposal is approved, then you will be able to remove a large part of your PF every 10 years. The government has seriously considered this proposal. This will give employees more freedom to meet their financial needs. The Economic Times has given a report in this regard.
What are the current PF withdrawal rules?
Currently, according to the rules of the Employees Provident Fund Organization EPFO, the following two conditions are applicable to withdraw the entire PF amount. First, retirement. An employee can withdraw the entire PF amount after obtaining 58 years of age or on retirement. Second, unemployment. If an employee remains unemployed for more than two months, he can withdraw the entire amount. In addition, partial withdrawal is allowed for some reasons. For example, for the treatment of medical emergency (eg, cancer, TB, heart disease), an employee can withdraw as much amount from his share to 6 months’ salary or from his PF balance. An employee appointed for buying/construction can withdraw 90% amount for buying, construction or mortgaged EMI after 5 years of service. For marriage, education, when 75% amount can be withdrawn after one month of unemployment and the entire amount after two months.
Digital processing made easy
However, all these reasons have certain conditions and limitations and sometimes require documents or employers’ approval. What will be the benefit of the new proposed rules? According to the new proposal of EPFO, employees will be allowed to withdraw large amount from PF every 10 years while in job. This will give many benefits to the employees. Employees will be able to use PF amount according to their needs, which will reduce the need to take a bank loan for big expenses. There is no need to wait till retirement for big needs like buying homes, education, marriage, medical expenses. Employees will be able to rely on their savings, which will reduce the burden of loan and interest cost. EPFO has simplified digital processes. For example, the limit of auto-calm settlement has been increased from Rs 1 lakh to Rs 5 lakh and in 95% of cases the claims are dealt with within 3-4 days.
Other important changes
From May or June 2025, employees will be able to withdraw up to Rs 1 lakh immediately through UPI, such as Paytm, Google Pay and ATM. For this, UAN and OTP related to Aadhaar will be required.
According to the new rules, employees can withdraw 90% amount after 3 years of service to buy homes, construction or EMI (earlier it was 5 years). This benefit can be taken only once in a lifetime. Claims up to Rs 1 lakh for medical emergency are automatically approved, and a total of 18 verification norms have been intensified. Pensioners can now remove pension from any bank, and no additional verification is required for this. EPFO has integrated 120 databases, and 95% claims are settled within 3 days
Taxation related rules
If you withdraw the amount of PF in less than 5 years, then 10% (if PAN) or 30% If PAN is PAN, then TDS will be charged. The amount withdrawn after a 5-year job is tax-free. The PF account is not taxed even after transferring the PF account with the new employer. If this proposal is approved, employees will be able to use their long -term savings for their immediate needs. Especially the middle class will get financial help for big needs like buying homes, studies or treatment. Employees should keep enough money for retirement. Experts recommend that PF is mainly for financial security after retirement.