Premature withdrawal from EPF Account: Here’s all you need to know

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August 11, 2020 2:04 PM

Partial withdrawals or advances from PF are allowed only under certain conditions. However, keep in mind that EPF works on compounding and the corpus, if allowed to build up, can reap huge benefits.

EPF partial withdrawal, ePF withdrawals, covid 19 lockdown, EPF funds withdraw, EPFO data, CMIE, Covid-19 claims, pf withdraw,Partial withdrawals or advances from PF are allowed only under certain conditions. However, keep in mind that EPF works on compounding and the corpus, if allowed to build up, can reap huge benefits.

The Employees’ Provident Fund (EPF), the government-run pension scheme run by the Employees’ Provident Fund Organization (EPFO), allows subscribers to only make a partial withdrawal or advances from the PF corpus under certain circumstances. To withdraw 100 per cent of the corpus, the subscriber must be at least 58-year old. Also, at the age of 57 years, 1 year before retirement, one can withdraw up to 90 per cent of one’s corpus.

At the time of retirement or at maturity, the PF amount is paid in a lump sum. Hence, a subscriber should plan the withdrawals in the right way to get monthly income till his/her life expectancy. Experts suggest not to withdraw the PF amount till retirement. However, in order to meet short-term needs, the subscribers could do so. Partial withdrawals are allowed for financial goals like education, wedding planning, house construction, and any kind of medical issue. Keep in mind though that the interest earned and withdrawals are not taxed.

Partial withdrawals or advances from PF are allowed only under certain conditions. However, keep in mind that EPF works on compounding and the corpus, if allowed to build up, can reap huge benefits.

  • One can withdraw funds from one’s PF balance for medical treatment of self, spouse, parents, or children. The subscriber can withdraw 6 months’ basic wages and Dearness Allowance (DA) or employees’ shares with interest, whichever is low. Hence, one can withdraw up to 6 times of one’s salary for medical treatment. Additionally, there is no minimum service period required for this.
  • In the case of marriage of self or child or brother or sister, a PF advance can be made. One can make a maximum PF withdrawal of 50 per cent of the employee’s share. Note that, subscribers would have to complete a minimum of 7 years in service to avail of this condition.
  • For education purposes, one can withdraw up to 50 per cent of employees’ share of the contribution to the education of self or children after class 10th. A subscriber would have to complete 7 years of service for this. Hence, up to 50 per cent of the contributions made can be withdrawn for 3 times for marriage or education.
  • For repayment of home loan, one can withdraw up to a maximum of 90 per cent from both employee’s contribution and employer contribution, if the subscriber has completed 10 years of service. Keep in mind that the property has to be registered in the name of the employee or spouse or jointly. Hence, for repayment of a house loan, up to 36 times of the subscriber’s salary can be withdrawn.
  • Additionally, for a house renovation, PF can also be withdrawn, for which the subscriber would have to complete 5 years of service. Hence, for repairing and remodeling his/her home a subscriber can withdraw up to 12 times his/her salary, and for purchase of a site or plot of land the subscriber can withdraw up to 24 times of his/her salary.

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