Today everyone knows that EPF (Employee’s Provident Fund) is a very powerful tool to create decent retirement corpus. Currently it is 12% compulsory contribution of your basic + Dearness Allowance from both end employer and employee each. Whether you like it or not, it makes you a regular and disciplined investor for your retirement.

Once you leave the company/organisation, you have the option to withdraw the EPF accumulation so far or transfer the same to new employer, but how many of you know that there is a provision of withdrawal some or full portion of EPF if there is a major (defined) requirement during the job also. Strange! But true, you can withdraw your EPF accumulated amount, but there are certain conditions need to satisfy for each objective (marriage, medical treatment, buying/construction of new home or renovation of old home etc.) of withdraw which we will discuss in this article.

PurposeConditionsWithdrawal permitted for Year of ServicesEligible Amount to WithdrawnNo. of time Permits
MarriageProof of wedding required to be submitted in EPFO prescribed in form 31 like wedding invitation card. Self, Siblings or Children’s marriage.Min of 5 Year 50 per cent of the total corpus amount till datePermitted thrice during a person’s total service tenure
EducationProof of the education required to be submitted, such as a valid copy or a bonafide certificate of the payable fees.Self or Children’s Education only.
Medical treatmentThe proof of hospitalization for a month or more along with an approved leave certificate from the employer for the corresponding period needs to be produced.self, spouse, parents and children.No restriction Six times the monthly salary of an individual or the total corpus amount, whichever is lesserNo limit
The member needs to obtain and deposit a certificate from the employer or ESI stating that ESI facility is not accessible or available to him/her.
A certified proof or document of the disease should be submitted in Form 31 while applying for withdrawal.
Purchase of a plotThe plot should not be entangled in any legal issues, and the agreement registered under the Indian Registration Act with the flat promoter needs to be submitted along with the application form 31.The plot or property should be registered in the person’s or his/her spouse’s name or should be owned jointly.Min of 5 Year Up to 24 times the monthly salary of the individualOnce during entire service tenure
Construction or purchase of a flat or houseThe site or the house/flat or the house under construction is free from encumbrances. The house should be registered in the person’s or his/her spouse’s name or should be owned jointly.36 times the monthly salary of the individualOnce during entire service tenure
Repayment of home loanAny currently running home loan with lender along with relevant proof of loan. The house should be registered in the person’s or his/her spouse’s name or should be owned jointly.Min of 10 Year36 times the monthly salary of the individualOnce during entire service tenure
Alteration or renovation of houseIt should be for renovation or alternation of house. Annexure III (construction / completion certificate/ utilisation certificate) should be submitted.The house should be registered in the person’s or his/her spouse’s name or should be owned jointMin of 5 Year Up to 12 times the individual’s monthly salaryOnce during entire service tenure
Pre-retirementThe individual must be at least 54 years old.SelfNA90 per cent of the total corpus amountOnce during entire service tenure

Please note: The amount of withdrawal or advance is not required to be refunded back into the account, but if the amount is not utilized for the specified objective/requirement, then the same needs to be refunded with applicable penal interest.

Process of Withdrawal:

You need to submit Form 31 along with Declaration form to your Employer to get the fund out of EPFO. You need to mention the requirement in Declaration form along with relevant supporting document to satisfy the conditions of withdrawal for objective/requirement you mentioned.

If you are unable to send the claim application through the employer or duly attested by him, for any reason whatsoever, you may forward it to the Commissioner EPFO or any other officer authorised by him in this behalf, and wherever necessary, the Commissioner or any other authorised officer in this behalf may forward such application to the employer and the employer shall be required, to return it to EPFO within five days of its receipt.

The payment may be made by following mode of payment:

  1. By postal money order, or
  2. By deposit in the payee’s bank account in any Scheduled Bank or any Co-operative Bank (including the Urban Co-operative Banks) or any post office or
  3. By deposit in the payee’s name the whole or part of the amount in the form of annuity term deposits scheme in any Nationalised Bank, or
  4. Through the employer.

Taxation on EPF Withdrawal:

EPF withdrawal may attract tax if withdrawal is made before 5 years of continuous services otherwise not.  EPFO will deduct the TDS from the withdrawal amount.

This 5 year condition will not be applicable if;

  1. Service is terminated due to ill-health.
  2. Your employer business does not exist.

In short if you see the EPF is really help in most of the conditions which actually required a huge investment therefore keep your EPF transferring from one employer to another employer once you change the job so that you can build a good amount accumulation. It will help you in rainy days.

Hope this article help you in seeing the opportunity if you are stuck with liquidity crunch for above specific conditions.

Know how your current EPF can help you to meet your major cash requirements

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