EPF: When Are You Allowed To Withdraw Your Funds?

The Employees’ Provident Fund (EPF) is a contribution-based savings scheme to provide financial security to employees post retirement. Both the employee and employer contribute towards this fund. The corpus that’s created can be accessed under specific conditions.

There are three types of EPF withdrawals:

• Final settlement: Complete withdrawal of funds upon meeting eligibility criteria.

• Partial withdrawal: Withdrawal of a portion of funds under specific circumstances.

• Pension withdrawal: Access to pension benefits depending on years of service.

Employment: People still working cannot withdraw either partially or fully from their PF accounts as long as they remain employed. However, under specific conditions such as medical expense or wedding, the funds could be accessed.

Unemployment: If somebody is unemployed for at least one month, they can withdraw up to 75% of their EPF balance. If the person is unemployed for over two months, they can withdraw the entire amount.

Premature Withdrawal: Certain withdrawals made within five years of opening an EPF account are taxable. If the amount withdrawn is less than Rs 50,000, no tax deducted at source (TDS) applies. But if the amount exceeds Rs 50,000, TDS is applicable.

The amount of TDS is based on these conditions:

• 10% TDS if the person has a PAN card.

• 30% TDS if a PAN card is not available.

Full Withdrawal: Employees can withdraw their entire PF amount under the following circumstances:

• Unemployment for more than two months.

• Delay in securing new employment for over two months after leaving a job.

Job Changes

Employees are not required to transfer their EPF balance immediately upon changing jobs. The process can be initiated once their Universal Account Number (UAN) is activated and all necessary documentation is submitted.

• As per the EPF Act, members must apply for final settlement upon retirement at 58 years.

• If an individual has more than 10 years of service, they qualify for both EPF and Employees’ Pension Scheme (EPS) benefits.

• If the service period is less than 10 years, the full EPF amount can be withdrawn.

• Post-retirement EPF withdrawals are tax-free.

Employees can use their EPF savings for housing needs after holding the account for three years. Employees can withdraw up to 90% of their EPF balance for:

• Building a new house

• Paying EMIs on a home loan

• Making a down payment on the property

Understanding EPF withdrawal rules is important for making informed financial decisions. While the scheme ensures long-term financial security, knowing when and how to withdraw funds can help employees navigate emergencies and major financial commitments without unnecessary tax liabilities.