Understanding PF Withdrawal Process

The Provident Fund (PF) is a retirement savings scheme designed to help salaried individuals build a financial cushion for the future. It involves regular contributions from both the employee and employer. PF plays a crucial role in ensuring long-term financial security. PF withdrawal helps employees access their long-term savings when most needed, offering both financial relief and a sense of security. In recent years, PF withdrawals have become more accessible, especially in cases of emergencies.  In this blog, you will learn about PF withdrawal, including its meaning, eligibility criteria, withdrawal process, and more.

What is Employees' Provident Fund (EPF)?

The Employees' Provident Fund (EPF) is a government-backed retirement savings plan where both the employer and employee regularly contribute a part of the employee's salary. It helps build a secure financial future post-retirement. The amount saved earns interest, and withdrawals are tax-free if specific conditions are met. The EPF interest rate is set at 8.25%.

Limit on PF Withdrawal Amount

Here is a detailed explanation for the limit on PF Withdrawal Amount:

There is no fixed Limit on EPF Withdrawal. The Employees’ Provident Fund (EPF) allows complete or partial withdrawal of the saved amount. The withdrawal depends on the reason and duration of service. Some cases allow full withdrawal, while others permit only a part of the balance. The rules are fixed and must be followed strictly.

1. Complete Withdrawal

An employee can withdraw the full EPF balance only under two specific conditions:

1. Unemployment

If a person remains unemployed for one month, they can withdraw up to 75% of the total EPF balance. After two months of unemployment, they can withdraw the remaining 25%. This applies only if the individual is not earning from any job during that period. If a person switches jobs without a break of two months, they cannot withdraw the full amount.

2. Retirement

A person can withdraw the full EPF amount after retirement from active service. There is no limit in this case. Retirement usually refers to reaching the age of 58 or any earlier age fixed in the employment terms.

2. Partial Withdrawal

EPFO permits partial withdrawal for specific needs. These come with certain limits, minimum service requirements, and other conditions.

1. Medical Expenses

An employee can withdraw either 6 months’ basic wage and dearness allowance (DA) or their total employee contribution with interest, whichever is lower. There is no need to complete a fixed number of years of service. This is allowed for medical treatment of self or family members (spouse, children, or dependent parents).

2. Education

EPFO allows withdrawal up to 50% of the employee’s contribution along with interest. The employee must complete at least 7 years of service. The education should be for children after Class 10 (post-matriculation level).

3. Marriage

The employee can withdraw up to 50% of their contribution with interest. A minimum of 7 years of service is required. This applies to the marriage of self, son, daughter, brother, or sister.

4. Land or House Purchase / Construction

• For land: Withdrawal limit is 24 times the monthly basic wage plus DA.
• For house purchase or construction: The limit is 36 times the monthly basic wage plus DA, or the total balance in the EPF account (including employer share), or the actual cost—whichever is lower.

Minimum service of 5 years is required. The property must be in the name of the employee, spouse, or both jointly.

5. House Renovation

The employee can withdraw up to 12 times the monthly wage plus DA or the employee’s share with interest, or the actual renovation cost whichever is lower. Minimum service of 5 years is required. The house must be owned individually or jointly with the spouse.

This withdrawal is allowed twice:

• First time after 5 years of house completion
• Second time after 10 years of house completion

6.  Loan Repayment

An employee can withdraw up to 36 times the monthly wage plus DA, or the full EPF balance (employee and employer shares), or the outstanding home loan amount—whichever is lower. Minimum 10 years of service is required. The loan must be taken from a registered financial institution. A certificate from the lender must confirm the unpaid principal and interest.

7. Before Retirement

An employee can withdraw up to 90% of the total EPF amount with interest.

This applies only after the age of 54 and within one year of retirement or superannuation—whichever is later. The fund helps meet financial needs before retirement begins.

3. Special Cases

EPF withdrawal is also allowed in some exceptional situations:

• If the company remains closed for over 15 days and no compensation is paid
• If the employee does not receive wages for more than 2 months

In such cases, the employee can withdraw 100% of their share with interest. The reason for the non-payment must not be due to a strike.

Documents Required for PF Withdrawal

Here are the key documents required for PF withdrawal:

• Composite Claim Form (Aadhaar/Non-Aadhaar)
• Universal Account Number (UAN) should be active and linked with KYC
• Aadhaar Card
• PAN Card
• Bank Passbook / Cancelled Cheque
• Identity and Address Proof: Aadhaar, passport, driver’s license, or voter ID accepted
• Two Revenue Stamps applicable for offline submissions (stamps required for form attestation)
• Supporting Documents (purpose-specific): Example: Education/marriage – school/university certificate; medical – doctor’s certificate (if requested)
• Form 20 / 10D / 5IF Used by nominees/legal heirs in case of a member’s death
• PAN Form 15G/H (Optional)

Procedures for PF Withdrawal

Here are the procedures for PF withdrawal Online and Offline:

1. Online PF Withdrawal Procedure

Step 1: Pre-requisites

Things to Check before Submitting PF Withdrawal Request Online

1. UAN Activation:
   • Ensure your UAN (Universal Account Number) is active and linked to your mobile number.
2. Aadhaar Verification:
   • Your Aadhaar must be verified through e-KYC or OTP.
3. Bank Account Details:
   • Your bank account number with IFSC code must be updated and visible in your UAN profile.
4. PAN Linking (If Service < 5 Years):
   • If you’re applying for final settlement using Form 19 and your total service is under 5 years, link your PAN to avoid higher TDS deductions.
5. Employment Status:
   • You must not be employed under any EPF-covered organization at the time of applying.
6. Waiting Period for Final Withdrawal:
   • Final withdrawal is allowed only after 60 days of leaving your job.
7. Pension Withdrawal Eligibility (Form 10C):
   • For withdrawing pension using Form 10C, your total service must be between 6 months and 9 years 6 months.

Step 2: Log in to EPFO Member Portal or UMANG App Using Aadhaar Credentials

Visit the EPFO Member Portal or open the UMANG app. Enter the Aadhaar-linked mobile number. Receive an OTP on the registered mobile number. Enter the OTP to complete the login.

Step 3: Go to Online Services → Claim (Form 31/19/10C/10D)

After logging in, go to the top menu. Click on “Online Services.” Select the option “Claim (Form 31, 19, 10C & 10D)” from the dropdown. This opens the claim application form.

Step 4: Verify Bank Information: Last 4 Digits + IFSC

The system shows the bank details linked with the EPF account. Check the last four digits of the bank account number and the IFSC code. Confirm these details. This step ensures the claim amount goes to the correct bank account.

Step 5: Select Claim Type

Choose the type of withdrawal based on the requirement:

• PF Final Settlement (Form 19): Use this to withdraw the full Provident Fund amount after leaving a job permanently.
• Part Withdrawal (Form 31): Select this for partial withdrawal due to specific reasons like medical treatment, marriage, or housing.
• Pension Withdrawal (Form 10C or 10D): Use Form 10C to withdraw pension benefits if the service period is less than 10 years. Choose Form 10D if the service period exceeds 10 years and monthly pension is applicable.

Step 6: Provide Purpose and Upload Documents if Required

If applying for partial withdrawal (Form 31), choose the reason from the dropdown (e.g., illness, education, home purchase). Some options require supporting documents. Upload scanned copies as directed on the screen.

Step 7: Self-Certify and Submit Using Aadhaar OTP

Confirm the details on the form. Tick the self-declaration checkbox to certify the accuracy of the information. Enter the Aadhaar-linked mobile number. Receive an OTP. Enter the OTP to authenticate and submit the claim. No employer approval is needed if KYC details (Aadhaar, PAN, and bank account) are already verified.

Step 8: Track Claim Status through Portal or UMANG

After submission, visit the portal or app anytime to check the claim status. Go to “Track Claim Status” under “Online Services.” Most claims process within 15 to 20 working days. The amount reflects in the verified bank account after approval.

2. Offline PF Withdrawal Procedure

Step 1: Obtain the Relevant Forms

To begin the withdrawal, collect the necessary forms:

• Form 19 is used when an employee leaves the job permanently and wants to withdraw the entire Provident Fund amount.
• Form 10C applies when the employee's service is less than 10 years and they seek pension benefits under the Employees' Pension Scheme.
• Form 31 is used to withdraw a part of the EPF balance for specific purposes like illness, home purchase, or education.

These forms are available on the EPFO official website and at local EPF offices.

Step 2: Complete the Forms

Fill in the required information in the forms:

• Name, UAN, Aadhaar, and Bank Details must match the details registered with the EPFO.
• Write your name in full as per Aadhaar and bank records.
• Bank account number and IFSC code must be from the account where the amount should be credited.
• Enter your previous employer's name, address, and establishment code.
• Put your signature where required. The signature must match EPFO records to avoid rejection.

Step 3: Attach Required Documents

Include the following documents with the form:

• A cancelled cheque with your name printed on it helps EPFO confirm your bank account.
• A copy of your Aadhaar card proves your identity.
• A copy of your PAN card is necessary if your withdrawal exceeds ?50,000 and your total service is under 5 years.
• Fill and attach Form 15G if your annual income is below the taxable limit. This helps avoid deduction of TDS from your withdrawal.

Step 4: Submit the Forms

There are two submission options:

• Through Employer: Hand over the filled form and documents to your employer. They verify and forward it to the EPFO office with attestation.
• Direct to EPFO: If your employer is unavailable or unwilling to attest, submit the form directly to the regional EPFO office. In this case, ensure your KYC is fully updated and verified.

Step 5: EPFO Processing

Once the EPFO receives your form, they begin the verification process. The office checks the form details, your KYC records, and the attached documents. If all information matches, they approve your withdrawal. This process usually takes 15 to 30 days, though actual time may vary.

Step 6: Claim Status

You must visit the EPFO Member Portal and use the “Know Your Claim Status” feature to know the progress of your EPF claim. You can also get updates by calling the toll-free number 14470 or speaking directly with staff at your nearest EPF office for quick assistance and clarity.

Tax Implications on PF Withdrawal

Here are the tax implications on PF withdrawal:

1. Tax-Free Withdrawal After 5 Years

When an employee completes five or more years of continuous service, the entire EPF withdrawal becomes fully tax-free. This includes both the employee's contribution and the employer’s contribution, along with the interest earned. No tax is deducted, and no tax needs to be paid.

2. TDS on Withdrawals Before 5 Years

If an employee withdraws PF before completing five continuous years, the amount becomes taxable. In this case:

• EPFO deducts TDS at 10% if the withdrawal amount is more than ?50,000.
• If the PAN is not provided, EPFO deducts TDS at 30%.

This applies only if the claim is not for reasons like health issues, business closure, or service termination beyond control.

3. Tax on Interest Earned

When a PF account is closed before five years, the interest earned on the contribution becomes taxable. The interest is added to the individual’s income under the “Income from Other Sources” category. It is taxed based on the individual’s applicable income slab.

4. Form 15G / 15H to Avoid TDS

If the total income is below the taxable limit, the individual can submit Form 15G (for those under 60 years) or Form 15H (for those above 60 years). This helps avoid TDS even if the service period is less than five years. However, if the income crosses the basic exemption limit, TDS becomes applicable.

5. Multiple Employers and Service Continuity

When an individual works with multiple employers and transfers the PF from one employer to the next, the total period of service is counted together. So, even if there are job changes, as long as PF is transferred without a break, the total service duration helps in achieving the five-year condition.

6. Income Tax Return Requirements

If TDS is deducted on early withdrawal, the individual must report the withdrawal while filing the income tax return. If excess tax is deducted, it is refunded after proper filing. The individual must include both the principal and interest as taxable income.

7. EPF 3.0 and Tax Rules

EPF 3.0 allows people to withdraw PF at ATMs. However, the mode of withdrawal does not affect the tax status. The same tax rules apply whether the withdrawal is done online, offline, or through ATMs.

Conclusion

The PF withdrawal system offers employees a structured and reliable way to access their long-term savings when they genuinely need financial support. Whether for retirement, emergencies, or other critical life events, the EPF ensures a smooth and regulated process with clear eligibility rules, tax benefits, and both online and offline options. Understanding these provisions helps individuals plan better, make informed decisions, and stay financially secure throughout their professional journey. If you want to register for PF (Provident Fund), contact Online Legal India to get assistance.