EPF withdrawal rules 2018
Provident fund or the pension fund’s primary objective was to provide employees with a lump sum payment during resignation from their place of employment. In order to successfully achieve this goal, EPFO has listed a number of new PF withdrawal rules 2018, that an employee needs to follow for their own benefit.
Tax On PF Withdrawal
All withdrawals which are made before completion of 5 years in a row are subject to tax, post which they are tax-free.
• Withdrawals due to employment termination for illness will not attract tax.
• The amount will be taxable in case of withdrawal before completion of 5 continuous years.
• Any withdrawals made before 5 years in a row from the scheme, the employee should pay 30% tax on the principal amount along with the interest accrued if their PAN has not been submitted to the EPFO authorities and if they had submitted, 10% TDS will apply.
• Funds transferred from PF account to the NPS will not attract tax.
New PF Withdrawal Rules
PF holders can make a complete or partial withdrawal under the following circumstances:
• Payment of house construction or home loan.
• Payment of medical expenses.
• Unemployment for more than two months.
• Wedding or education expenses.
• The resignation of women employee for marriage, childbirth, pregnancy, etc.
• Moving abroad permanently.
PF Withdrawal Limit
Employees can make withdrawals based on the below-listed circumstances:
|Reason for PF withdrawal||Minimum Years||Withdrawal Limit of PF||Relations|
|House Construction or purchase of plot||3 yrs||90% of the PF balance||PF account holder/spouse/joint|
|Repayment of Home Loan||3 yrs||90% of the PF balance||PF account holder/ spouse/ joint|
|House renovation or alteration||5 yrs from completion of house||12 times of the basic salary or employee share with
interest (whichever is lower)
|PF account holder/ spouse/ joint|
|On the event of Marriage||7 yrs||50% of the PF balance||PF account holder/ siblings/ children|
|On the event of medical treatment||Not required||6 times the monthly salary/ total corpus (the lower one)||PF account holder/ spouse/parents/children|
Requirements for PF Withdrawal
In order to make a withdrawal, subscribers have to meet the below-listed requirements:
• Ensuring their UAN is active and mobile number is linked to PF account.
• Ensuring that they seed their Aadhaar card details.
• Ensuring that they seed their PAN details, prior to completion of 5 years, for the final settlements in their PF scheme.