Tax on PF withdrawal

Employee Provident Fund (EPF) scheme, the main approach is to provide benefits to the employees at the time of their retirement. The EPF scheme specifies that a nominal amount is deducted from the employees’ salary as a contribution towards the fund. Tax on PF withdrawal is the main concern of the employee who leaves the company early. The changes regarding the Income-tax rules on the EPF withdrawal are discussed below.

Employee Provident Fund Organisation or EPFO can deduct tax at source (TDS) only if an employee falls under these two cases:

• If the employee has not completed 5 years of his/her continuous service.
• If the EPF withdrawal amount is more than Rs.50,000. Earlier the limit was Rs.30,000

EPF Withdrawal Rules

The government introduces the new Provident Fund (PF) withdrawal rules. They are;

• Withdrawal restrictions

The whole amount in the EPF cannot be withdrawn till the age of retirement. The PF account consists of the contribution made by the employer, a contribution made by the employee, and interest earned on employer and employee contribution.

• The exception to the new rule 

Female employees are given exemption who is resigning from the services for getting married or due to childbirth or pregnancy. So, they can withdraw the whole EPF Balance.

• Retirement Age

The retirement age is 58 years. A person can withdraw up to 90% of the PF balance on attaining the age of 57 years.

• PF Membership and employment

The membership as an employee would not withdraw the full PF balance till the age of retirement.

• As per the old rule, 100% PF is allowed to withdraw after 2 months of unemployment.
• An individual can not withdraw a complete EPF amount while switching employers if they don’t be unemployed for two months or more.

Frequently asked questions (FAQs)

Do I require the employer’s permission to withdraw the PF amount from EPF?

According to the new amendment, there is no need to take the permission of the employer to withdraw the amount from EPF.

Will the employer also contribute a higher share when I do?

No, the employer’s contribution will remain the same regardless of you opting for VPF.

Which forms are used for PF withdrawal?

• EPF Form 19 – you can use EPF funds for final settlement and 
• EPF Form 31 – you can use for partial withdrawal or avail an advance from the EPF account.
• EPF Form 10C – you can use online to withdraw the Employee Pension Scheme (EPS) amount.
• EPF Form 13 –  Form 13 you can use to transfer your PF amount.

Will EPFO continue to pay interest on EPF Account after leaving the company?

If you resign from your job before the age of 58 years, your EPF account will be inactive if you don’t apply for EPF withdrawal within 36 months from the date you are eligible to make the application. After your EPF account becomes inactive, you will not earn further interest in it.

This completes our post on Tax on PF withdrawal.

If you have any queries regarding this post, kindly drop your queries in the comment section below.

Related:

PF online withdrawal procedure

PF partial withdrawal rules

Partial PF withdrawal 

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