The EPFO has taken several steps towards making PF Withdrawal Rules & Regulations more convenient for employees and ex-employees. A person might require immediate short-term funds for a wedding, building a house, an emergency, etc. A person’s PF fund is always an asset, but understanding the PF rules and regulations along with the latest details and guidelines is essential before withdrawing.
PF Withdrawal Rules & Regulations
Some of the Rules and Regulations with respect to Withdrawal of PF include:
- A person can withdraw their PF only after 60 days or 2 months has elapsed since their last job/employment.
- A person can withdraw their PF after 5 years of continuous job/employment without having to pay any tax. Continuous employment can be with one employer or several employers.
- If a person withdraws their PF (and interest) before 5 years, then that amount is taxable in the next Assessment Year. If the applicant has a PAN card, then the tax rate is at 0-10%. On the contrary, if the applicant doesn’t have a PAN card, then the tax rate is at 30%.
- If an employee is dismissed, then any PF withdrawal will not be taxable. The reason for dismissal should be beyond the control of the employee, such as winding up of business or health issue of the employee.
- A person can claim benefits under Section 80C on their PF contribution. These benefits will be taxed as salary under Income from Other Sources.
- An applicant has the option to transfer funds from their PF account to their NPS or National Pension Scheme account. This transfer of funds is not taxable.
- Applicants can make PF withdrawal using the Aadhaar Form or the non-Aadhaar Form along with employers attestation. An applicant also has the option of doing the entire process online or in-person, physically.
- Marriage – the PF withdrawal limit is at 50% and minimum services years required is 7.
- Home Loan Repayment – the PF withdrawal limit is at 36 times salary and minimum services years required is 10.
- Purchase/Construction of plot – the PF withdrawal limit is at 24 times salary and minimum services years required is 5.
- Medical treatment – the PF withdrawal limit is at 6 times monthly salary and no minimum services years requirement.
- Retirement – the PF withdrawal limit is at 90% and minimum services years required is 54 or on retirement.