Employee's Provident Fund: Find ways to withdraw it & other details
In these difficult times when there is a cash crunch and lack of liquidity in the economy everyone is hunting for finance options other than salary.
In these difficult times when there is a cash crunch and lack of liquidity in the economy everyone is hunting for finance options other than salary. Either there is a pay cut for the employees or an unfortunate shut down for many businesses this year. There is good news in the offing. Employees Provident Fund Organization (EPFO) of India has brought a ray of hope for the employees and employers in the form of financial support and concessions.
Employers and employees can take advantage of the facilities availed by the government of India to ease their financial situation. The government of India has announced that it will pay the employers and employees to contribute to their EPF accounts from June to August 2020. EPF is certain per cent of the salary cut from the employer's and employee's salary and is contributed to each one's EPF account.
EPF is a mandatory cum retirement scheme by the government for the employees of an eligible organization. After retirement, an employee can depend on PF (Provident Fund) for financial support. The government also has some provisions for an employee where he/she can withdraw PF funds if in need of money before retirement. All he has to do is apply online in advance for the withdrawal amount. EPF increases over time till the time of retirement as government pays a certain rate of interest on the PF amount.
Previously, as per the norms of the EPF, each employee had to contribute a 12 per cent salary cut to EPF account which can be claimed once the employee gets retired from the job. But taking into consideration the present situation of the economic slowdown, the government has announced a 2 per cent cut in the contribution to the PF from the salaried employee's salary. Now a 10 per cent cut would be contributed to the PF account on a monthly basis. Same is applicable in case of an employer as well.
However, up to 75 per cent of the PF can be claimed and withdrawn from the account as per the new rules and regulations announced by the government. The condition is that the withdrawer needs to be eligible for certain requirements which have been discussed below.
EPF can be withdrawn partially or completely whichever one opts under two circumstances. The first one is when an individual retires from the job. The second is when an individual remains unemployed for more than two months. But under the second condition, one needs to get an attestation from a Gazetted Officer for the same.
But there is also a restriction which one has to abide by. The EPF fund withdrawer cannot claim the amount from the EPF account if he/she remains unemployed for two months during switching from one employer to another. It is against the prescribed rules and regulations of the EPFO.
Partial withdrawal can be made under certain circumstances which are as follows:
1. Partial withdrawal can be done for medical purposes for medical treatment of self, spouse, children or parents. Amount withdrawn should be six times the monthly basic salary of the employee or the total employee's share plus interest, whichever is lower.
2. 50 per cent of the employee's contribution to EPF can be withdrawn for the marriage of self, son/daughter and brother/sister. But the employee should have rendered at least 7 years of service to the company.
3. Either for the account holder's post matriculation or the children's post matriculation education purposes up to 50 per cent of the employee's share to the EPF can be withdrawn. This also requires the employee to serve the company for at least 7 years.
4. For purchase of land or purchase/ construction of a house, one can withdraw an amount from EPF account. For this, the years of service to the company should be at least 5 years. Up to 24 times of the monthly basic salary plus the dearness allowance can be withdrawn for land and up to 36 times the monthly basic salary can be withdrawn for a house respectively. The above limits are restricted to the total cost.
- The employee is required to fulfil three other conditions apart from the above.
- The land or the house should be in the name of the employee or spouse or jointly with the spouse.
- The amount can be withdrawn just once during the entire term of service of the employee.
- The construction work must begin within 6 months and completed within 12 months from the date of withdrawal of the last instalment.
- Home loan repayment can also be done with the amount withdrawn from the PF account. For this condition to apply the employee should have worked with the company for at least 10 years. The amount of up to 36 times of the basic monthly salary plus dearness allowance can be withdrawn. The total corpus should include employer and employee's contribution with interest. Total outstanding interest and the principal amount of loan can be withdrawn. The employee can withdraw the least of the abovementioned three points.
Other additional conditions are as follows:
- The property should be registered in the name of the employee or spouse or jointly with the spouse.
- Withdrawal is permitted by submitting the prescribed documents stated by the EPFO relating to the housing loan availed.
- The amount in the employee's account (or combined with the spouse) including interest should not be less than Rs. 20,000.
- The amount from the Provident Funds account can also be withdrawn for house renovation. The amount should be least of the three. First, up to 12 times the monthly salary plus dearness allowance. Second, employee's contribution with interest and last, the total cost of renovation. For this condition to be applied one should have completed at least 5 years with the company. Other fulfilment terms are as follows:
- The property should be registered in the name of the employee or spouse or jointly held by both.
- The facility of withdrawal can be availed twice, (a) after 5 years of completion of the house and (b) after 10 years of completion of the house.
- Once the employee reaches 54 years of age partial amount up to 90 per cent including interest can be withdrawn by the PF account holder. But this amount can be withdrawn within one year of retirement or superannuation.
Steps to be followed while withdrawing from EPF account
EPF withdrawal can be achieved by two ways, (a) submitting a physical application, and (b) submitting an online application on the portal in advance.
For submission of the physical application, you need to download the form from official EPFO online portal www.epfindia.gov.in which has two options available. The first is the Composite Claim Form(AADHAR) which should be filled and physically submitted to the respective judicial EPFO office without the attestation of the employer. The second is Composite Claim Form (non-AADHAR) which needs to be filled up and submitted with the attestation of the employer to the respective judicial EPFO office.
It may also be noted that in case of withdrawing the PF amount partially the requirement of various certificates to be submitted along with the application, the option of self-certification has been introduced by the EPFO India on February 20, 2017, which can be verified by visiting the official EPFO portal.
The EPFO India has launched the online process of PF amount withdrawal by the employees making it hassle-free and time-saving process. The online form needs to be filled and submitted in advance on the online portal to receive the claim on time. One needs to fulfil the first two requirements before applying for the withdrawal of the PF amount.
1. UAN should be active and the mobile number registered with the EPFO should be working. UAN is a Universal Account Number provided to the registered employee by the organization.
2. UAN should be KYC connected (with AADHAR, PAN and bank account details along with the IFSC code of the bank).
After meeting the above-mentioned requirements you need to follow 10 simple steps on the portal, which have been discussed as follows:
1. Open the UAN portal by clicking on this link https://unifiedportal-mem.epfindia.gov.in/memberinterface/Login with your UAN (Universal Account Number) and enter the password and captcha.
2. Click on Manage and select KYC to verify your details.
3. Go to the Online Services tab and select Claim form- 31, 19 and 10C from the drop-down menu.
4. Online Claim screen displays member details, KYC detail and other bank details. Enter the last four digits of your bank account number and click on Verify.
5. The next page appears showing Certificate of Undertaking. Click on Yes to proceed to the next page.
6. Click on Proceed for Online Claim.
7. The next page appears on the screen with the Claim Form. Select the required claim under the "I want to apply for" tab, i.e., full EPF settlement or EPF part withdrawal (loan/advance) or pension withdrawal. If the applicant is ineligible for any of these services then these options will be a no show.
8. The applicant can then select PF Advance (Form 31) to withdraw the amount after providing the purpose of withdrawal, amount and applicant's address.
9. The last step is to click on the certificate and submit the application. To submit the scanned documents for the purpose of withdrawal may be asked. One needs to get the request approved by the employer for the amount to be transferred to the bank account of the applicant. After carefully following the required procedure the amount gets transferred to the bank account within 15 to 20 working days.
The EPFO India also makes other facilities available through the official online portal mentioned above. The registered employee or employer can also apply for LIC Policy to be financed through a PF account or Settle Pension Fund.