Are you planning to withdraw your Employees’ Provident Fund (EPF) corpus? If you have been without a job for two months and want the entire corpus to come to your kitty in one go, you should apply for withdrawal before April 30. This is because the Employees’ Provident Fund Organisation (EPFO) has recently deferred the applicability of the new withdrawal norms from May 1, 2016. The new norms, initially notified on February 10, would make it tough for you to access the entire amount if you do not meet the criteria set out.
As per EPFO norms, 12 per cent of an employee’s salary goes as contribution to EPF along with a matching contribution from the employer.
The existing withdrawal rules say that a subscriber who has been out of job for two months can apply for withdrawal of the entire accumulated corpus. However, once the new norms come into play this would change.
So, what do the new norms say? And how are they different from the present norms?
Change in retirement age: For starters, the new norms would set the retirement age for provident fund purposes to 58 years against the earlier 55. The revised norms are pegged around this age criteria.
How much can you withdraw? Unlike the present status, the new norms would make it difficult to withdraw the entire corpus (including employer’s contribution, employee’s contribution and the interest accrued) lying against your name. Under the new provisions, if you are below 58 years, and employed, you will be able to withdraw only your own contributions lying in the fund and the accrued interest on that. You will be allowed to withdraw the employers’ contribution only when you attain 57 (one year before the retirement age of 58). Since the earlier retirement age was 55, you could withdraw the entire amount once you reached that age, which will be pushed back year from May 1.
The 90 per cent provision: With the present 55 years retirement provision, the EPF norms says that a subscriber is permitted to withdraw up to 90 per cent of the entire balance (employer’s contribution, employee’s contribution and accrued interest) once you attain 54 years or within a year of actual retirement. Once the new 58 years retirement age provision kicks in, the withdrawal option will be available once you attain 57 years. And the entire corpus, instead of 90 per cent, can be pulled out at one go.
Membership to stay: The new norms would force you to remain an EPFO member till retirement age of 58, or between 57 and 58 if you wish to pull out your money a year before. This is because the employers’ contribution cannot be withdrawn till that time.
Earlier, once an employee withdrew the entire amount at any time citing two months of being without an employment, your EPFO membership would terminate.
Exemption for women: The new norms make it easier for women It stipulates that woman who quit their job for getting married, pregnancy or childbirth will not have to wait for two months to withdraw. They can do so immediately.
Withdrawal before 5 years to be taxed: However, as earlier, if you withdraw your PF money within 5 years of joining as a subscriber, your withdrawal would be subject to Tax Deduction at Source (TDS) if the amount is above Rs 30,000.