How to pf withdrawal

What is Provident Fund (PF) Withdrawal?

Provident Fund (PF) withdrawal is the process through which an employee can access the accumulated funds in their PF account. The Employees' Provident Fund (EPF) is a mandatory retirement savings scheme in India, managed by the Employees' Provident Fund Organisation (EPFO). Contributions are made by both the employee and the employer. While the primary purpose of PF is to provide financial security upon retirement, the EPF scheme allows members to withdraw a portion or the entirety of their accumulated balance under specific circumstances before retirement.

Types of PF Withdrawals

There are broadly two main types of PF withdrawals:

1. Final Settlement (Full Withdrawal)

This allows a member to withdraw the entire accumulated PF balance. It is typically availed under the following conditions:

• Retirement: Upon attaining the age of 55 years or superannuation.
• Unemployment: If an individual remains unemployed for a continuous period of two months or more after leaving their job. In such cases, the member can withdraw 75% of the PF balance after one month of unemployment and the remaining 25% after two months. Alternatively, they can opt for a full withdrawal after two months of unemployment.
• Permanent Migration: If the member plans to settle abroad permanently.

2. Partial Withdrawal (Ad-hoc Withdrawal)

This allows members to withdraw a portion of their PF balance for specific needs without closing their PF account. The eligibility and withdrawal limits vary based on the purpose:

• Marriage: Members can withdraw up to 50% of their own contribution along with the interest earned thereon for their marriage or the marriage of their children. This is allowed only after completing 7 years of continuous service.
• Education: Up to 50% of the employee's share plus interest can be withdrawn for the education of self, children, or spouse. This requires 7 years of continuous service.
• Medical Treatment: Withdrawal is allowed for medical treatment of self, family (spouse, children, parents), or any serious illness. The amount that can be withdrawn is the lower of:
  • 6 months of basic salary and dearness allowance (DA) plus DA
  • The employee's own share of contribution with interest
  • The estimated cost of medical treatment
  This can be availed at any time, irrespective of the service period.
• Purchase/Construction of House/Plot: Members can withdraw up to 24 times their basic salary and DA (or 90% of the balance, whichever is less) for purchasing a house or plot, or for constructing a house. This requires 5 years of continuous service.
• Home Loan Repayment: Up to 24 times the monthly installment of loan repayment (or 90% of the balance, whichever is less) can be withdrawn for repaying a home loan. This requires 10 years of continuous service.
• Renovation/Modification of House: Up to 12 times the basic salary and DA (or 90% of the balance, whichever is less) can be withdrawn for renovation or modification of an existing house. This requires 5 years of continuous service.
• Natural Calamities: In case of damage to the house due to natural calamities like floods or earthquakes, members can withdraw up to 90% of their PF balance or the amount required for restoration, whichever is less.
• COVID-19 Advance: A special provision was made during the pandemic allowing members to withdraw up to 75% of their PF balance or three months' basic salary and DA, whichever is lower, as a non-refundable advance.

How to Apply for PF Withdrawal

The process for PF withdrawal can be done both online and offline:

Online Process (Recommended)

1. Login to EPFO Portal: Visit the EPFO member portal (unifiedportal-mem.epfindia.gov.in) and log in using your UAN (Universal Account Number) and password.
2. Navigate to Online Services: Go to the 'Online Services' tab and select 'Claim (Form-31, 19, 10C & 10D)'.
3. Enter Bank Details: Enter your bank account number linked with your UAN to verify your details.
4. Submit Claim Form: Select the type of withdrawal required (e.g., 'Only Pension' for Form 10C, 'Only PF Withdrawal' for Form 19, or 'PF Advance' for Form 31). Fill in the required details, upload a scanned copy of your cheque and identity proof (like Aadhaar card), and submit the form.
5. Aadhaar Authentication: Complete the Aadhaar-based OTP authentication.
6. Employer Approval: The claim request is then sent to your employer for approval.
7. EPFO Processing: Once approved by the employer, the EPFO processes the claim.

Offline Process

For offline applications, you need to download the relevant composite claim form (Aadhaar or Non-Aadhaar) from the EPFO website. Fill it out accurately, attach necessary documents (like ID proof, bank details, cancelled cheque), and submit it to your jurisdictional EPFO office or your employer.

Documents Required

The exact documents may vary based on the type of withdrawal and whether you are using the Aadhaar-based online system. Generally, you will need:

• UAN and Password (for online submission)
• Bank Account details (with IFSC code)
• Cancelled Cheque leaf of the bank account
• Identity Proof (e.g., Aadhaar card, PAN card, Passport)
• Passport-sized photographs
• Form 15G/15H (if applicable, to avoid TDS on certain withdrawals)
• Proof of the reason for withdrawal (e.g., medical certificate, sale deed, marriage invitation)

Tax Implications

The taxability of PF withdrawal depends on whether it is a final settlement or a partial withdrawal, and the duration of service:

• Final Settlement before 5 years of continuous service: The employer's contribution and the interest earned thereon are taxable. However, the employee's contribution is always tax-free.
• Final Settlement after 5 years of continuous service: The entire amount withdrawn is tax-free.
• Partial Withdrawals: Generally, partial withdrawals for specific purposes like medical treatment, education, or home purchase are tax-exempt, provided the conditions laid down by the EPF scheme are met.
• TDS: Tax Deducted at Source (TDS) is applicable if the withdrawn amount exceeds ₹50,000 and the member has not submitted their PAN card. The TDS rate is 10% if PAN is provided and the service period is 5 years or more; otherwise, it is 30% (plus surcharge and cess). If Form 15G/15H is submitted and the conditions are met, TDS is not deducted.

Processing Time

The EPFO aims to process withdrawal claims efficiently. Online claims, especially those submitted with Aadhaar-linked details, are usually processed faster, typically within 3 to 7 working days. Offline claims or those requiring additional verification might take longer, ranging from 7 to 20 working days.