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PF withdrawal Rules and Regulations


The Employee Provident Fund (EPF), administered by EPFO (Employee Provident Fund
Organization, a statutory body under the labor ministry, ministry of finance), helps employees
save a small fraction of their remuneration every month and thereby, build a corpus which is
tax exempt for use in the fag end of their lives or retirement. Albeit, EPFO is a long-term
savings tool, primarily aimed for a stress-free retirement, salaried employees may choose to
withdraw their money in their EPF account to cater to different financial requirements or at
the time of any major life events such as weddings, home renovation/alteration and medical
treatment among others. All organisations which have employed more than 20 employees
should compulsorily register with EPFO. To make the optimum use of the EPF account,
salaried employees must be aware of what a provident fund account entails and how it is

Employee Provident fund (EPF)

It is important to note that 12% of the basic pay of a salaried employee (in addition to
dearness allowance and cash value of food allowances, if any) is deducted from his or her
remuneration on a monthly basis as contribution towards an EPF account. However, from the
employers contribution, 8.33% is deposited in the Employee Pension Scheme (EPS) while
only 3.67% is deposited in the EPF account. The current rate of interest (for financial year
2015-16) for an EPF account is 8.7% p.a. The rate of interest is subject to change every year,
as announced every year by EPFO.

EPF account withdrawal: Procedure

If salaried persons wish to withdraw their EPF accounts, they have to submit form 19 to their
ex-employers, who in turn, have to sign and attest it. To complete the withdrawal procedure,
members have to submit various other documents, namely, resignation letter and a cancelled
cheque in addition to form 19 to the EPFO.

EPF withdrawal rules

It is important to note that withdrawal of the EPF account by a salaried employee between
switching jobs his or her jobs is illegal. As per PF withdrawal rules, a salaried employee can
withdraw a provident fund account on two counts; first, if he or she has no job and second, if
two months have elapsed since his or her last employment (not attached to any organization
or unemployed for 2 months). Nevertheless, there are cases wherein employees - assuming a
cumbersome claims process- may withdraw their EPF account at the time of leaving an
organisation. However, apart from the legal angle, experts do not recommend following the
aforementioned practice from the perspective of financial management as well in that a
salaried employee cannot avail of several benefits of maintaining a provident fund account
including tax-free interest, annual compounding and compulsory long-term savings among

others. Experts, therefore,, advice employees to instead transfer the EPF balance in their
previous employers account into the account of their current employer. However, the
government of Indias Unique Account Number or UAN simplifies the procedure
(management and transfer) given that it is allotted to all salaried employees and will not
change throughout their careers. Salaried employees will, therefore, not be provided a new
account number when they hop jobs or companies.

EPF withdrawal rules: Purposes

Salaried employees may withdraw money from their EPF accounts for various purposes,
subject to certain conditions. Individuals have to furnish several documents in addition to
meeting the eligibility criteria as per epf withdrawal rules. The list of purposes and quantum
of contribution which can be withdrawn are listed below:

Marriage A salaried person can withdraw for self, siblings and children. He or she
should, however, have completed a minimum of seven years of service to withdraw
50% of contribution (thrice in a career).
Medical treatment A salaried person can withdraw up to either six times of his or her
monthly salary or total corpus towards medical treatment of self, parents, spouse and

Construction/Purchase of plot If a salaried person wishes to withdraw from an EPF

account for the purpose of either construction or purchase of a plot, the property must
be registered in his or her name, spouse or be jointly held. A minimum of five years of
service is required to withdraw an amount which is 24 times the salary of the account
holder. For construction of a house, 36 times of the salary of an account holder can be
withdrawn. It is important to note that withdrawal for said purpose can be done only
once during the service of an account holder.

Home Loan Repayment If a salaried person wishes to withdraw from an EPF

account for the purpose of home loan repayment, the house should be registered in his
or her name, spouse or be held jointly. A minimum of 10 years of service is required
to withdraw up to 36 times of the salary of an account holder.

House renovation/alteration If a salaried person wishes to withdraw from an EPF

account for the purpose of house renovation or alteration, the house should be
registered in his or her name, spouse or be held jointly. A minimum of five years of
service is required to withdraw about 12 times of the monthly remuneration of an
account holder.

Retirement An individual must be 54 years old to withdraw up to 90% of the corpus

of his or her provident fund account.

Miscellaneous Individuals can choose to withdraw from their EPF account for
various other reasons such as premature retirement as a result of any physical or
mental disability, migrating abroad for the sake of better employment or settling down
in a foreign country.

EPF withdrawal amount: Taxation

If a salaried employee opts for withdrawal after continuous service of five years or above,
there will be no TDS deduction on the amount. It is important to note that if withdrawal is
made before the completion of five years of continuous service, the amount withdrawn will
be taxable. According to new EPF rules announced by the finance minister in budget for
financial year 2015-16, EPF withdrawal (taxable) will attract TDS deduction at the rate of
10% (in cases of registered PAN) or up to a maximum of 30% (in cases of unregistered PAN).
However, no TDS will be deducted if the withdrawal amount is under Rs.30,000. It is
important to note that an individual can submit form 15G during the time of withdrawal if his
or her income is less than the basic exemption limit even after the addition of the provident
fund withdrawal amount. If a subscriber does not submit his or her PAN, TDS will be
deducted at 34% on his or her withdrawn amount. If salaried persons want to avoid TDS, they
can submit form no. 15H (senior citizens) or 15G for amount up to Rs.3 lakh and Rs.2.5 lakh
respectively (both the said forms are declaration forms which can be used by employees
whose income is less than the taxable amount). It is important to note that there will be no
TDS deduction in cases of transfer of a provident fund account and termination of an
employment contract as a result of failing health (employee), cessation/discontinuation of a
business venture (employer) or any other cause which may not be in the domain of an

EPF account withdrawals: Grievances

The Consumer Protection Act encompasses a detailed procedure to resolve various
grievances of EPF account holders. An individual or member can log on to the official
website of EPFO at and click the tab register grievance. A member can
register all kinds of grievances vis-a-vis withdrawal of EPF account, insurance benefit
(payment), scheme certificate, transfer of the account, cheque misplacement and PF balance
issuance among others.

EPF online direct withdrawal facility

All cumbersome paperwork related to withdrawal of EPF account may be a thing of the past.
EPFO aims to launch an online facility for PF withdrawal in 2016. EPFO, which currently
has over five crore members, is planning to settle PF claims in three hours after receipt of a
withdrawal application (online application will be transferred to the bank accounts of
subscribers). To the end, EPFO has become UIDAIs registrar. While around 92 lakh
subscribers provided their Aadhaar numbers, EPFO verified around 64 lakh numbers so far
(as of October 2015) for linking it with UANs.


Latest EPF Withdrawal Rules w.e.f 10th

Feb 2016
Last updated: May 31, 2016 | by Sreekanth Reddy 1,277 Comments

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The Ministry of Labour and Employment, Government of India, has recently made a few
amendments in the Employees Provident Fund Scheme, 1952 (PF Scheme). These guidelines
are mainly related to early withdrawals from Provident Fund & provisions related to PF
withdrawals. These latest EPF withdrawal rules are effective from 10th February, 2016.
Amendments are related to;

Full EPF balance cannot be withdrawn before attaining the Retirement Age.
Continuity of EPF membership.

Increase in Age limit to withdraw 90% of PF balance.

Partial withdrawal of EPF amount on Resignation.

Increase of retirement age.

Lets discuss in detail about these new PF withdrawal rules.

Latest Update (20-Apr-2016) : Govt rolls back new EPF withdrawal norms and old
system will continue. The notification which was issued on 10th Feb, 2016 has been
cancelled. So, the existing rules will be continued..

Kindly click on the below image to download the latest notification.

Latest EPF Withdrawal Rules

Full EPF balance cannot be withdrawn (limit on early PF withdrawals)

o Existing rule : The EPF members (employees) can withdraw the
full EPF balance after 60 days of unemployment. (The EPF
balance consists of employees contributions + employers
contributions + interest amounts. Every month 12% of your
salary is contributed towards EPF account.)

New Rule : The EPF members cannot withdraw full PF amount

before attaining the age of retirement. The maximum withdrawal on
cessation of employment cannot exceed an amount aggregating
employees own contribution and interest accrued thereon. You can

withdraw your contributions + interest portion only. The employers

portion can be withdrawn after attaining the retirement age (58

Continuity of your EPF membership


Existing rule : If an employee withdraws full EPF amount after

resigning from the job, his/her PF membership is deemed to be
terminated. That means he/she is not a member of EPF scheme
after the full withdrawal.

New Rule : An employee can only withdraw his share on resigning

from the job. You cannot withdraw full EPF amount before attaining
the retirement age. So, you will still be the member of EPF even if
you cease to be an employee of a EPF covered establishment. I
believe that concept of In-operative EPF a/c may cease to exist.

Retirement Age

Existing rule : The retirement age is considered as 55 years.

New Rule : The age of retirement has now been increased from 55
to 58 years.

EPF Withdrawal provisions


Existing rule : You (employee) can withdraw the full PF amount on

retirement from service (55 years) or on cessation of employment
and not being employed for at least 60 days.

New rule : As discussed above, the retirement age has now been
increased from 55 to 58 years and the option of full EPF withdrawal
on resignation will not be allowed. You can withdraw your
contributions + interest portion only.

90% of EPF balance


Existing rule : You can withdraw up to 90% of your entire PF

balance (employee share + employer share) on attaining 54 years
of age or within one year before actual retirement, whichever is

New rule : You would now be able to avail this option only on
attaining the age of 57 years. The age has now been increased from
the current 54 years to 57 years.

Budget 2016 & EPF Scheme New Rules

Budget 2016 is negative for the salaried class. As per the Budget 2016 proposal, at the time of
retirement, 40% of the EPF lump sum withdrawal is tax-exempted, 60% of the corpus is
subject to taxes as per the applicable Income Tax Slab. To avoid this, the EPF member has to
invest this 60% balance in an Annuity life insurance product.
However, this 40:60 tax rule is applicable only on the corpus created out of contributions
made after 1st April, 2016. also, the EPF member who is investing in Annuity dies and when
the original Corpus goes in the hands of his heirs, then there will be no tax.
The Budget 2016-17 proposal of levying income tax on 60% of EPF balance has been
withdrawn by the government. So, no tax will be levied on PF withdrawals at the time of
retirement. The other Budget proposal to make 40 per cent of the total withdrawal
from the National Pension Scheme (NPS) will however remain unchanged. (Latest news :

Your EPF contributions / savings are meant for your retirement. Dipping into the corpus
before you retire prevents your money to gain from the power of compounding.
These new rules may FORCE you to accumulate a portion of your PF fund till you attain the
retirement age. Besides above new rules, kindly note that the withdrawals from the EPF

within five years of joining are


TDS has been made applicable if one withdraws PF within 5 years. (Budget 2016 update : In
case of payment of accumulated balance due to an employee in EPF, the TDS limit is being
raised from Rs 30,000 to Rs 50,000. So, TDS is not applicable if the PF withdrawal amount
is less than Rs 50,000. This new amendment is applicable with effective from 1st June, 2016.)
If you would like to retire early or would like to start a business after being employed for few
years, you may surely not like these new EPF withdrawal rules.
Proposed EPF Withdrawal Rules with effective from 1st August, 2016
Below are the key takeaways from the latest press-release released by the
Ministry of Labour & Employment.
1. The proposed new withdrawal rules will be implemented from 1st Aug

2. The amended rules do not allow an employee to withdraw the entire

amount from his or her PF account till the subscriber attains the age of 58,
the age of retirement.
3. According to the new rules, he/she can only withdraw the contribution to
the PF and interest accrued on it. The employers contribution and interest
can only be withdrawn after attaining the age of retirement.
4. Based on the public feedback/backlash, it has been decided that Full PF
accumulations (Employees + Employers share + interest) will be paid to
the EPF member on fulfilling any of the following conditions;

Housing purpose of a member.

Medical treatment Self / family member suffering from TB,

Leprosy, Paralysis, cancer or Heart operation.

Marriage of children.

Professional education of children (like Medical/Engineering/Dental).

If EPF member joins an establishment belonging to or under the

control of the Central or State Government and becomes a member
of Contributory PF or any old age Pension scheme. (I believe this
rule may again lead to lot of confusion and we may witness
backlash from PVT sector employees.)

The above said provisions/rules will be effective from 01-Aug-206 and the
necessary notification will soon be released in the official Gazette of
India. (These points are based on the latest press release. I will try to update this
post if required)

Latest News (18-April-2016) : The Minister of state for Labour and Employment
(Independent charge) now decides to postpone the date of implementation of new conditions
for EPF withdrawal to 1st August 2016. This was earlier planned for implementation from
1st May 2016.
Latest Update (02-April-2016) : The Employees Provident Fund Organization (EPFO) has
decided to make the above rules effective from 1st May, 2016 instead of 10th Feb, 2016.
Accordingly, all the claims received upto 30th April, 2016 will be settled as per the earlier
rules/provisions. Kindly go through the new circular, click on the below image to download

the circular.
Latest Update (30-March-2016) : The Employees Provident Fund Organization (EPFO) has
decided to provide Interest on Inoperative Accounts from 1st April, 2016. This move will

benefit over nine crore such account-holders having total deposits of over Rs 32,000
crore. Inoperative accounts are those wherein the PF contributions have not been received for
36 months. EPFO had stopped payment of interest to such accounts from April 1, 2011.