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. This accumulated corpus can be withdrawn by the employee upon retirement.

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. 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:

1. Final Settlement: This occurs when an employee retires or resigns. They can withdraw the full accumulated amount in their EPF account.
2. Partial Withdrawals: These are allowed under specific conditions such as medical emergencies, higher education, marriage, or home purchase.
3. Pension Withdrawal Benefit: This applies when an employee reaches the age of 58 or 50, with at least 10 years of service, allowing them to receive a monthly pension.

Withdrawal from the EPF is governed by various rules to ensure it is used primarily for retirement and specific financial needs. Here are some important regulations: 

1. Employment Status: 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.
2. Withdrawal Limits: If unemployed for one month, individuals can withdraw up to 75% of their EPF balance. If unemployment extends to two months, they can withdraw the remaining 25%.
3. TDS Deductions: Tax Deducted at Source (TDS) applies to EPF withdrawals, but this can be avoided by submitting Form 15H or 15G, provided other conditions are met.
4. Tax Implications: 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.
5. Loans Against PF: Employees can take loans against their PF savings after a certain number of years in service.
6. Job Changes: 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 necessary forms are submitted.
7. Complete Withdrawal: 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.

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:

1. In Case of Unemployment: In situations where 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.
2. 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 wages, whichever is lower.
3. 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.
4. 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.
5. 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 is the lesser of 36 times the monthly wages plus dearness allowance or the total of the employee's and employer's share with interest.

Documents Required for EPF Withdrawal

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

1. Aadhaar Card: Linked with UAN.
2. PAN Card: To avoid TDS on withdrawals.
3. Bank Account Details: Passbook or cancelled cheque with the account number and IFSC.

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.

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.