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When To Withdraw Money From Employee Provident Fund (EPF) Account?

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Employee Provident fund (EPF) is a fund contributed by employee out of his/ her CTC every month and contribution by the employer. Whenever we switch our job from one employer to another what we usually do is either we transfer the EPF fund by submitting the details of our existing EPF account to new employer or we open a new EPF account and keep the first one idle. People usually do it unknowingly as they are not aware about the EPF transfer policy or do it to withdraw the accumulated amount from first EPF account and contribute fresh in the new one.

First of all withdrawal of EPF on job change is not allowed as per law, which means if you change your job you should transfer your existing EPF account with your new employer. If in case your new employer has no EPF facility then only you can make your withdrawal. But in that case if your total working years in your first company are less than 5 years then your EPF withdrawal will attract taxes. In other words, any EPF withdrawal before completion of 5 years of service i.e before 5 years from the date of opening EPF account will attracts taxes.

ALSO READ : Withdraw Employee Provident Fund (EPF)-Check Procedure & Tax Exemptions

EPF Withdrawal

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So here we can conclude that the period of service is very important for the withdrawal of EPF amount.

EPF Withdrawal Without Any Tax Burden

Lets list down the cases in where withdrawal from EPF is exempt from tax:-

  • Withdrawal at the time of retirement.
  • Withdrawal after 5 years of continuous service (Continuous contribution to one EPF account for 5 years or more.).

Note : Once you complete your 10 years of service then the amount contributed towards EPS will become eligible for pension and you will not be able to withdraw the EPS amount. In short your 10C form will not be accepted by EPFO for withdrawal.

ALSO READ : How To Check Employee Provident Fund (EPF) Balance Online?

Any withdrawal other than above mentioned cases or premature withdrawal will be taxed. In that case the amount contributed by the employer will be clubbed to the income of the employee and accumulated interest will be treated as income from other sources and taxed accordingly.

EPF Withdrawal Before Retirement

But as per EPF law any withdrawal before retirement is not allowed but there are few categories which allows an employee to withdraw its EPF funds. Like

Medical Treatment : In case of some medical emergency, employee can withdraw funds from his/ her EPF account without any restriction. The only condition lies is, the withdrawal from EPF account should be made either for self, children, spouse or parents.

Purchase/ Construction of house : An employee can withdraw funds from his/ her EPF account after completion of 5 years for the purchase or construction of housing property. Withdrawal for this purpose can be made by an employee only once in his total service period. The amount of withdrawal can be 36 times the monthly salary of the employee with a condition the housing property should either be registered in employee’s name or spouse name or jointly registered.

ALSO READ : Who Is Your Nominee For EPF Scheme?

Purchase of plot : An employee can withdraw funds from his/ her EPF account after completion of 5 years for the purchase of plot. Withdrawal for this purpose can be made by an employee only once in his total service period. The amount of withdrawal can be 24 times the monthly salary of the employee with a condition that plot should either be registered in employee’s name or spouse name or jointly registered.

Alteration of house : An employee can withdraw funds from his/ her EPF account after completion of 5 years for the alteration of house. Withdrawal for this purpose can be made by an employee only once in his total service period. The amount of withdrawal can be 12 times the monthly salary of the employee with a condition that house should either be registered in employee’s name or spouse name or jointly registered.

Marriage/ Education : An employee can withdraw funds from his/ her EPF account after completion of 7 years for the purpose of marriage or education. Withdrawal for this purpose can be made by an employee thrice in his total service period. The max amount of withdrawal can be 50% of his total corpus. He can withdraw this amount for the marriage of children, siblings or self whereas the withdrawal can be made for the education of self or children only.

Repayment of housing loan : An employee can withdraw funds from his/ her EPF account after completion of 10 years for the purpose of repayment of his housing loan. Withdrawal for this purpose can be made by an employee only once in his total service period. The amount of withdrawal can be 36 times the monthly salary of the employee with a condition that house should either be registered in employee’s name or spouse name or jointly registered.

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Pre-Retirement : An employee can withdraw funds from his/ her EPF account after completion of 54 years of his/ her age or one year before retirement – whichever is later. Withdrawal for this purpose can be made by an employee only once in his total service period. The max amount of withdrawal can be 90% of his total corpus.

ALSO READ : Download EPF Forms In India For The Withdrawal Of Employee Provident Fund Directly

For Direct EPF Withdrawal  

If due to some reason your old employer is not available and you are stuck as your EPF form needs to be attested by your employer for the transfer/ withdrawal purpose. In that case you can get your EPF form attested from any one of the following officers.

  • Manager of a bank.
  • Gazetted officer.
  • Member of the Central Board of Trustees./ committee/ Regional Committee (Employees’
    Provident Fund Organization).
  • Magistrate/ Post/ Sub Post Master/ President of Village Panchayat/ Notary Public.

You can request the withdrawal of your EPF fund after 2 months from the date of your resignation and EPF will settle your account by transferring your EPF balance directly to your bank account (except any amount less than Rs 2000).

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