The latest rules on provident fund withdrawal have made the process easier, giving more relief to the working population covered under the EPF scheme. Under various circumstances, you may need to withdraw funds from your provident fund account. Many new regulations have been introduced to make this process convenient.
Types of provident fund withdrawal
Provident fund investors can make three different types of withdrawals:
- Provident fund final settlement
- Provident fund partial withdrawal
- Pension withdrawal benefit
Conditions for provident fund withdrawal
While making withdrawals from the provident fund, there are multiple conditions in which the withdrawal amount is tax-free. For example,
- If the withdrawal is after completion of 5 years of continuous service in the EPF segment
- If the employee becomes unemployed due to reasons involving health-related issues
- If the employment is terminated
- If there is fund transfer from your Provident Fund (PF) account towards the National Pension Scheme
Provident fund withdrawal rules before the completion of 5 years
If you want to withdraw from PF before completion of 5 years, the following rules will be applicable:
- 30% of the principal amount and interest will be taxed, if PAN card details aren’t provided to the EPFO (Employees’ Provident Fund Organization).
- 10% TDS or tax will be deducted from source if PAN card details are provided to the EPFO.
Rules for partial withdrawal:
Sometimes, it becomes highly important for an investor to make a partial withdrawal of the provident fund. For such situations, there are certain exceptions provided to an employee to make a partial withdraw from EPF. These conditions are as follows:
- For marriage/education/ purchase of property or land purposes – If you are looking for a partial withdrawal of your provident fund, you can get it done when there is a marriage in the family, or you are using the money for any educational purposes, or when you are investing in a property.
- For home loan repayment purposes – You can also make a partial withdrawal of your provident fund when you are looking for an early home loan repayment.
- During the time of medical emergency – A medical emergency is another criterion when you can make a partial withdrawal of your provident fund.
Things to know when you decide to withdraw, transfer or claim your Provident Fund money
Withdrawing or claiming your provident fund money is easy. All you have to do is apply online, or you can simply put a physical application. The most convenient and faster way to do is visit the EPFO website and use any of the following to make a withdrawal or transfer the money –
- Aadhar card or your PAN details
- Digital Signature
Why you should invest your PF corpus in fixed deposits
Once you withdraw your PF money, you get a sufficient amount of money, which can be used for future investments or you can even use them to build a retirement corpus. With a number of investment options available, fixed deposits are an ideal way to multiply your EPF savings, while ensuring the safety of your capital. You can avail the following benefits when you invest your EPF corpus into a company fixed deposit plan like Bajaj Finance FD:
- Earn an interest rate of up to 8.75%- one of the highest in India. For senior citizens, the interest is 0.35% higher and can go up to 9.10%.
- The minimum amount required to start an FD is INR 25,000; which makes it easier for you to stagger your investments across various FD schemes.
- Avail higher credibility and stability of your returns, as guaranteed by ICRA and CRISIL.
- Opt for flexible tenors. The minimum tenor is just 12 months while you can decide to invest until the 60 months.
- Calculate your earnings in advance using an online fixed deposit (FD) calculator.
- Easier application process offered with Experia- your online fixed deposit account.
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