Most of the employees working in the organised sector in India contribute to their EPF (Employee Provident Fund) every month. While the fund is primarily a financial means to fund the employee’s retirement life, there are provisions that allow premature withdrawal of the fund. But in what circumstances can you withdraw the amount, and what is the procedure involved?
Read on to find out all you need to know about EPF and its withdrawal:
What is EPF?
In simple words, EPF or PF (Provident Fund) is a social security fund to assist an employee’s post-retirement period. Employees in the organised sector contribute a small portion—12 per cent—of their monthly basic pay every to their EPF (also called the Employee Provident Fund Scheme). A similar amount is also contributed by the employer. The resultant amount forms the corpus.
The corpus is to be used to fund the employee’s retirement.
Premature EPF withdrawal
However, the Employee Provident Fund Organisation (EPFO), the statutory body that manages the provident fund, allows EPF withdrawal during the course of their employment. While complete withdrawal is allowed only in two cases, partial withdrawal of PF comes as a relief to the individual to fund their various needs.
Conditions for EPF withdrawal
EPFO allows complete withdrawal of EPF only in two circumstances:
1. When an individual retires from employment
2. When an individual remains unemployed for a period of 2 months or more.
Here, it is important to note that complete withdrawal of EPF during the interim period between changing jobs will be against the PF rules and regulations and therefore illegal.
However, the EPFO is more flexible with partial withdrawal of the provident fund. An employee can apply for partial withdrawal under the following circumstances:
Marriage: An EPFO member can withdraw up to 50 per cent of the fund for his/her own marriage, the marriage of his/her daughter/son/sister/brother. However, it should be noted that the person should have completed seven years in contribution to the EPF.
Education: Post-matriculation education of his/her son/daughter. Here too, the member have complete seven years of membership in the EPFO..
House: Construction or purchase of house. Here, the member has to complete only five years of EPFO membership.
Home renovation: It can be availed two times—one, upon five years of completion of the house and two, 10 years from availing the first option.
Medical purposes: For medical treatments of self, spouse, children and parents. There is no lock-in period or minimum service period for this type of withdrawal.
Home loans: Repayment of home loan under certain conditions. However, the individual needs to complete at least 10 years of service.
Retirement: After completing 58 years of age.
What is UAN?
The Universal Account Number (UAN) is a unique 12-digit number of the employee allotted by the EPFO. Every time an employee switches job, EPFO allots a new member identification number (ID), which will be linked to the UAN. Once the member ID is created, it gets linked to the UAN of the employee. The UAN number comes handy while checking your passbook, balance and while applying for online.
How to apply for EPF withdrawal?
Submission of a physical application for withdrawal (offline application):
Subscriber ought to have an active UAN and the mobile number used for activating the UAN number should be in working condition.
Download the new composite claim (Aadhaar)/composite claim form (Non-Aadhaar) from the EPFO website.
If you are going for the Aadhaar-based form, fill it and submit it to the respective jurisdictional EPFO office without the attestation of the employer. However, the new composite claim form (non-Aadhaar) should be filled and submitted with the attestation of the employer to the respective jurisdictional EPFO office.
How to apply for online EPF withdrawal
1. Visit the EPFO website.
2. Click on the online claim option on the homepage.
3. Enter your UAN and password.
4. Click on the tab ‘Manage’ and select KYC to check whether your KYC details such as Aadhaar, PAN and bank details are correct and verified or not.
5. Next, go to the tab 'Online Services’ and select the option ‘Claim’ from the drop-down menu.
6. The ‘Claim’ screen will display details including that of the member's, the KYC, etc. Click on the tab ‘Proceed For Online Claim’ to submit your claim form.
7. In the claim form, select the claim you require, i.e full EPF Settlement or EPF Part withdrawal (loan/advance) or pension withdrawal, under the tab ‘I Want To Apply For’, and Submit.
It is to be noted that, according to a recent media report, physical application for withdrawal might not be accepted by the EPFO if the employee has linked his/her Aadhaar to the UAN. This means that, if you have linked your Aadhaar to UAN, only online claims will be accepted by the EPFO for premature withdrawal.