In order to avoid delay or rejection of claims, an EPF member must make sure that his UAN is validated with Aadhaar and KYC of his/her bank account and the mobile number is updated in UAN.Â
To relieve people facing a cash crunch due to loss of income because of the Covid-19 lockdown situation, Indian government is allowing salaried employees to avail a non-refundable advance from their EPF (Employees’ Provident Fund) accounts. A member can withdraw an amount equal to three months basic pay plus dearness allowance or up to 75% of outstanding balance in his EPF account, whichever is lower. The outstanding amount consists of the employer’s share, employee’s share and interest. This facility can be availed while a member is still in service.
The advance will be available only till the pandemic prevails and can be availed just once. The EPFO has clarified that in case there is a pendency of the other advance, the application for Covid-19 claim is permitted. For such claims, a member can apply online, if his UAN (Universal Account Number) is validated with Aadhaar and KYC of bank account and the mobile number is updated in UAN.
As per the frequently asked questions section on the EPFO website, EPFO mentions that they are settling claims for availing advance within three working days. However, the member must make sure that the online filing process is carefully followed to avoid any delay in getting the money.
However, an individual should reconsider the decision before withdrawing money from the EPF account because it helps in building long-term retirement corpus and is tax efficient. The investment under EPF account gets a tax benefit under Section 80C of the Income tax Act, even the interest earned is tax free and hence the final withdrawal post retirement is also tax free. The retirement fund body has decided to give interest rate of 8.5% on EPF deposits for 2019-20, one of the highest among all fixed income instruments.
Ideally, if you’ve got funds in term deposits, you ought to withdraw that, as interest rates are having a decreasing trend. For instance, SBI (State Bank of India) is offering rate of interest of 5.5% for deposits of 1 to 3 years and 5.7% for deposits above 3 years. Therefore, if you fall under 20% tax bracket, the post-tax returns will be 4.36% and 4.52%, respectively.
How to avail non-refundable advance?
The online advance claim can be filed by the member for Covid-19 within the member interface of the unified portal of EPFO (https://unifiedportal-mem.epfindia.gov.in/memberinterface). Then click on ‘Online Services Claim’ (Form-31,19,10C & 10D). For getting faster claims, it’s mandatory to upload the first page of the bank statement or bank passbook containing the name, IFSC and account number or a cheque leaf containing name of the member. This is required to make sure that the bank account number uploaded within the KYC is correct and false payments are avoided. A member can even file the claim through mobile by downloading the UMANG app (Unified Mobile Application for New-age Governance). The user can login with his/her UAN and OTP received on the registered mobile number to file the claim. If the employee belongs to an exempted establishment, he/she can withdraw from the PF account maintained with the establishments’ PF trust. As per EPFO’s dashboard, till 12th May, 11,25,666 Covid-19 claims have been settled.
Mismatch in details
The member must make sure that the UAN is activated, verified Aadhaar is linked with UAN and the bank account (with IFSC code) is updated with UAN. If a member’s Covid claim is rejected because of mismatch in details, the details can be updated by logging into the member e-sewa portal and the claim can be filed once again. If a member has two different UANs, all the previous services should be transferred to the latest member ID. The member can do this by filing a transfer claim. Once the transfer is done successfully, the entire PF corpus will be reflected against the latest member ID and the Covid advance claim can be filed to reap the maximum benefit.
Processing of claims
After processing the claim, EPFO sends a cheque to the bank in order to credit the amount to the claimant’s account. The bank usually takes 1 to 3 working days to credit the advance in the claimant’s bank account. So, while applying for the claim online, do make sure that correct documents are uploaded, and scanned documents are clear. Additionally, ensure that the bank account linked with UAN isn’t inactive. However, in case there are any changes to the KYC details, the employer will have to update the same.
