PF Rules: If an employee remains unemployed for more than two months, he can withdraw 100% of the amount deposited in his EPF account.
PF Rules: Due to changes in the rules by the Employees’ Provident Fund Organization (EPFO), it has become easier and faster to make partial withdrawal and full withdrawal from Employees’ Provident Fund. Customers can now make partial withdrawals from their EPF account online. In December 2018, the retirement body changed its rules to allow subscribers to withdraw up to 75 per cent of the EPF corpus within a month after leaving the job. If an employee remains unemployed for more than two months, he can withdraw 100% of the amount deposited in his EPF account. However, there are some facts that one should know before making a withdrawal from the EPF account. Let’s know about them-
- If an employee does not complete the service for a period of five years, then the withdrawal from EPF is taxed.
- If you have transferred your EPF account from the previous employer, the previous employment period will also be added to the total employment period for tax purposes.
- Keep in mind that the amount lying in the EPF account consists of four parts – employee contribution, employer contribution and interest received on both the contributions.
- If the period of continuous employment is less than five years, then employer’s contribution to EPF along with interest received thereon is taxable in income tax return under the category ‘Income from other sources’.
- An employee’s own contribution becomes taxable under the head ‘Salaries’ if the withdrawal is made before the completion of five years and if you have claimed deduction on that contribution under section 80C of the Income Tax Act.
- TDS will be levied at the rate of 10 per cent on withdrawals made before five years of continuous employment.
- However, TDS will not be deducted if the amount is less than Rs 50,000 or the company ceases its operations.
- TDS on EPF withdrawal can be avoided by submitting Form 15G or 15H if his net income for that financial year is less than the taxable income limit.
Note that Form 15H is for senior citizens (60 years and above) and Form 15G is for those who do not have taxable income.
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