New Pf Withdrawal Rules 2019 – Income Tax on EPF Withdrawal

There are certain pf withdrawal rules which every EPF member should know about before submitting Pf Withdrawal Claim form online or physical application. In this post  i am going to explain each condition and the amount of Epf Account Balance that you can withdraw.

Pf Withdrawal Rules

Epf Members can withdraw funds from their provident fund account in 3 cases-

1. During Employment for Emergency Needs
2. Unemployed for more than 1 month
3. At the time of retirement or resignation
4. After reaching 57 years

Let me explain the amount that you can withdraw in all these 4 cases and conditions that you need to satisfy. I will also mention income tax that you need to pay in different scenarios.

1. How to Withdraw Pf Without Leaving Job

If you looking for a way to withdraw pf balance without leaving job, i will explain how to withdraw pf amount while working as advance.

You cannot withdraw full balance while working. You can apply for partial withdrawal as a advance. The purposes and the percentage of pf balance that you can withdraw are outlined in the following table.

S.No	Purpose of Withdrawal	% of Balance That you can Withdraw	No. of Years of Service	Other Conditions
1	Wedding	Up to 50% of Employee’s Contribution Plus Interest accrued	7 years	For the marriage of self, son/daughter, brother/sister
2	Education	Up to 50% of Employee’s Contribution	7 years	For the education of either himself or his children after class 10
3	Land Purchase/Construction of House	For land – Up to 24 times of Basic plus DA For house – Up to 36 times of Basic plus DA	5 years	The asset i.e. land or the house should be in the name of the employee or spouse or Jointly.
4	Home Loan Repayment	Up to 90% of both employee and employer contributions	10 years	i. The property should be registered in the name of the employee or spouse or jointly ii. House Loan Outstanding Amount Certificate from Bank is required iii. The accumulation in the member’s PF account (or together with the spouse), including the interest, has to be more than Rs 20,000
5	House Renovation	Up to 12 times of the monthly wages	5 years	The property should be registered in the name of the employee or spouse or jointly.
6	Medical Treatment	Employee’s share with interest or 6 times the monthly salary, whichever is lower.	No Minimum Service Period	For the treatment of self, spouse, children, and parents.

Pf Withdrawal Rules before 5 Years of Service – Taxation:

EPF withdrawal made before completion of 5 years of service is taxable at the slab rate applicable to the individual. If EPF withdrawal is made after 5 years of service, you don’t need to pay tax on pf withdrawal.

If the withdrawal amount is greater than Rs.50000, 10% TDS will be deducted. However, if PAN is not submitted, the TDS will be deducted at a rate of 34.608%. There is no TDS deduction if the withdrawal amount is less than Rs.50,000 but you have to show it as income from other sources and you have to pay income tax as per the slab rate applicable to you.

2. Unemployed for more than 1 Month

Epf has enabled members to withdraw money from the corpus if you remain unemployed for more than one month. You can withdraw money for a maximum up to 75% of the credit balance. The remaining 25% can be withdrawn when you are unemployed for more than 2 months.

You can withdraw 100% epf balance if you are unemployed for more than two months.

This will be a non-refundable advance which means that you can withdraw money without closing epf account and will not have to refund the money withdrawn.

3. Pf Withdrawal Rules after Resignation / Retirement

You can withdraw full pf balance after resignation or retirement. This is final and full settlement. You can withdraw both employee and employer contribution along with interest accrued.

If you have completed 10 years of service, the employee gets pension benefits after retirement.

In case the member who has not completed 10 years of service at the time of retirement, he can withdraw the complete pension contribution amount along with his provident fund balance.

Taxation: Withdrawal of total corpus and interest accrued in the EPF account after retirement is completely tax-free. If the member apply for withdrawal of epf corpus after completion of 3 years of retirement, the member has to pay tax on the interest earned.

4. Pf Withdrawal Rules After Reaching 57 Years Age

Any one who is 57 years old and still employed can withdraw up to 90% of the provident fund balance.

Important Things to know Before thinking about Epf Withdrawal During Employment

• Employee Provident Fund schemes was introduced with the aim of building retirement corpus which is safe investment. So, before withdrawing epf balance which is your retirement savings, you should be cautious about it.
• Withdrawals before 5 years of service completion is taxable. Hence you are losing money here and losing the power of compounding your money. Moreover, if you have claimed income tax deduction under 80c in previous years, you have to add that amount to withdrawal amount. You will end up paying more tax.
• If you have changed job, consider transferring epf balance accumulated in old epf account. So that you will continue accumulating epf balance. People often withdraw this amount instead of transfer. It will result in less retirement corpus.

FAQs on New Pf Withdrawal Rules 2019

1. I withdrew my PF after 5 years from my 1st contribution, but I only contributed for 4 years. Am I eligible for a tax exemption?

Ans: You are exempted from paying income tax for withdrawals made after 5 years of continued service. If you have contributed for 4 years, we can assume that your service is not continuous. Hence, you are liable to pay tax.

2. What are Pf Pension Contribution Withdrawal Rules?

Ans: You can withdraw the pension contribution for unemployment reasons and during full and final settlement after resignation or retirement. In other conditions, you cannot withdraw pf pension contribution.

This is all about Epf Withdrawal Rules. If you still have any doubt, Please comment below. I Can Help… Thanks!…