Have you recently retired from your public sector job or quit your job to grab a better opportunity or for higher study? If so, don’t forget the hard-earned money that is accumulated in Provident Fund (PF) Account over the years during your service period.
Before discussing how to withdraw the PF money, let’s see who are eligible for PF.
The Employees’ Provident Fund (EPF) Scheme is compulsory in private sector organisations employing 20 or more persons and for the employees having a monthly basic salary of Rs 15,000 or less (which is revised periodically) and is optional for employees earning higher basic salary.
As per the Provident Fund (PF) rules, 12 per cent of an employee’s salary goes into the fund along with a matching contribution from the employer, while employee’s entire contribution and contribution of the employer up to Rs 15,000 per month or 12 per cent of basic salary, whichever is lower, are eligible for deductions under section 80C.
Out of 12 per cent matching contribution by employers, 8.33 per cent goes to Employee’s Pension Scheme (EPS). Out of the total 24 per cent (12 per cent employee contribution plus 12 per cent employer contribution), 15.67 per cent goes to EPF. The Central government also contributes 1.16 per cent of the eligible basic salary.
Moreover, any interest over and above the interest rate declared for a particular year is added to taxable income under ‘Income from other sources’. Withdrawal of the PF amount after five years is tax free.
To withdraw the accumulated amount in PF, which includes contributions by employees and employers, as well as interest credited on total contributions over the years, an employee has to fill and submit Form 19.
Form 19 may be used for (i) PF Final Settlement; (ii) Pension Withdrawal Benefits or (iii) PF Non-Refundable Advance. While options (i) and (ii) may be opted for at the time of termination of service by retirement or otherwise, option (iii) is used during service depending on some terms and conditions.
The option of full pension withdrawal benefits is available only when the withdrawal is made before 10 years of continuous service due to termination of service. Otherwise, only a part of pension fund will be allowed to commute on the basis of 1/3 of eligible monthly pension.
To withdraw PF money after retirement or after premature termination, a member of the EPF Scheme has to fill his/her name, father’s/mother’s name, Universal Account Number (UAN) or PF Account No. (in case UAN not available), Aadhaar Number (for seeding), date of birth and dates of joining, leaving service, bank account details, in which the money is to be transferred, along with original canceled cheque with name on account holder(s) printed on it and complete postal address.
As tax benefits is not available on PF withdrawal before five years of continuous service, to withdraw PF money on quitting service before the 5-year period, the member has to mention PAN, along with reason for leaving the service, like – service terminated on account of (a) ill health of member (b) contraction/discontinuation of employer’s business or (c) other cause beyond the control of the member. A member may also withdraw PF money if he/she quits service due to any personal reason.
Such a member may also submit in duplicate Form 15G/15H to avoid deduction of TDS. Otherwise, TDS will be applicable @ 10 per cent, if only PAN is given and over 34 per cent, if PAN is also not provided.
After submission and processing of Form 19, the PF money will be transferred to the bank account of the departing member and a statement will be sent to his/her postal address as provided in the form.