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others. Experts, therefore,, advice employees to instead transfer the EPF balance in their
previous employers account into the account of their current employer. However, the
government of Indias Unique Account Number or UAN simplifies the procedure
(management and transfer) given that it is allotted to all salaried employees and will not
change throughout their careers. Salaried employees will, therefore, not be provided a new
account number when they hop jobs or companies.
Marriage A salaried person can withdraw for self, siblings and children. He or she
should, however, have completed a minimum of seven years of service to withdraw
50% of contribution (thrice in a career).
Medical treatment A salaried person can withdraw up to either six times of his or her
monthly salary or total corpus towards medical treatment of self, parents, spouse and
children.
Miscellaneous Individuals can choose to withdraw from their EPF account for
various other reasons such as premature retirement as a result of any physical or
mental disability, migrating abroad for the sake of better employment or settling down
in a foreign country.
If a salaried employee opts for withdrawal after continuous service of five years or above,
there will be no TDS deduction on the amount. It is important to note that if withdrawal is
made before the completion of five years of continuous service, the amount withdrawn will
be taxable. According to new EPF rules announced by the finance minister in budget for
financial year 2015-16, EPF withdrawal (taxable) will attract TDS deduction at the rate of
10% (in cases of registered PAN) or up to a maximum of 30% (in cases of unregistered PAN).
However, no TDS will be deducted if the withdrawal amount is under Rs.30,000. It is
important to note that an individual can submit form 15G during the time of withdrawal if his
or her income is less than the basic exemption limit even after the addition of the provident
fund withdrawal amount. If a subscriber does not submit his or her PAN, TDS will be
deducted at 34% on his or her withdrawn amount. If salaried persons want to avoid TDS, they
can submit form no. 15H (senior citizens) or 15G for amount up to Rs.3 lakh and Rs.2.5 lakh
respectively (both the said forms are declaration forms which can be used by employees
whose income is less than the taxable amount). It is important to note that there will be no
TDS deduction in cases of transfer of a provident fund account and termination of an
employment contract as a result of failing health (employee), cessation/discontinuation of a
business venture (employer) or any other cause which may not be in the domain of an
employee.
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The Ministry of Labour and Employment, Government of India, has recently made a few
amendments in the Employees Provident Fund Scheme, 1952 (PF Scheme). These guidelines
are mainly related to early withdrawals from Provident Fund & provisions related to PF
withdrawals. These latest EPF withdrawal rules are effective from 10th February, 2016.
Amendments are related to;
Full EPF balance cannot be withdrawn before attaining the Retirement Age.
Continuity of EPF membership.
Latest Update (20-Apr-2016) : Govt rolls back new EPF withdrawal norms and old
system will continue. The notification which was issued on 10th Feb, 2016 has been
cancelled. So, the existing rules will be continued..
Retirement Age
o
New Rule : The age of retirement has now been increased from 55
to 58 years.
New rule : As discussed above, the retirement age has now been
increased from 55 to 58 years and the option of full EPF withdrawal
on resignation will not be allowed. You can withdraw your
contributions + interest portion only.
New rule : You would now be able to avail this option only on
attaining the age of 57 years. The age has now been increased from
the current 54 years to 57 years.
Your EPF contributions / savings are meant for your retirement. Dipping into the corpus
before you retire prevents your money to gain from the power of compounding.
These new rules may FORCE you to accumulate a portion of your PF fund till you attain the
retirement age. Besides above new rules, kindly note that the withdrawals from the EPF
TDS has been made applicable if one withdraws PF within 5 years. (Budget 2016 update : In
case of payment of accumulated balance due to an employee in EPF, the TDS limit is being
raised from Rs 30,000 to Rs 50,000. So, TDS is not applicable if the PF withdrawal amount
is less than Rs 50,000. This new amendment is applicable with effective from 1st June, 2016.)
If you would like to retire early or would like to start a business after being employed for few
years, you may surely not like these new EPF withdrawal rules.
Proposed EPF Withdrawal Rules with effective from 1st August, 2016
Below are the key takeaways from the latest press-release released by the
Ministry of Labour & Employment.
1. The proposed new withdrawal rules will be implemented from 1st Aug
2016.
Marriage of children.
The above said provisions/rules will be effective from 01-Aug-206 and the
necessary notification will soon be released in the official Gazette of
India. (These points are based on the latest press release. I will try to update this
post if required)
Latest News (18-April-2016) : The Minister of state for Labour and Employment
(Independent charge) now decides to postpone the date of implementation of new conditions
for EPF withdrawal to 1st August 2016. This was earlier planned for implementation from
1st May 2016.
Latest Update (02-April-2016) : The Employees Provident Fund Organization (EPFO) has
decided to make the above rules effective from 1st May, 2016 instead of 10th Feb, 2016.
Accordingly, all the claims received upto 30th April, 2016 will be settled as per the earlier
rules/provisions. Kindly go through the new circular, click on the below image to download
the circular.
Latest Update (30-March-2016) : The Employees Provident Fund Organization (EPFO) has
decided to provide Interest on Inoperative Accounts from 1st April, 2016. This move will
benefit over nine crore such account-holders having total deposits of over Rs 32,000
crore. Inoperative accounts are those wherein the PF contributions have not been received for
36 months. EPFO had stopped payment of interest to such accounts from April 1, 2011.