Are you working in a private firm and tensed about whether or not your PF can secure the present, if needed? EPF or PF is a saviour for all the employees out there who have no other option but retirement. This can be a viable source of income even after the completion of jobs they are currently doing. We often come across the definition of PF and its post-withdrawal feature. But have you ever acknowledged that it can be withdrawn even while you are working? Well, yes you can, and it is called PF Advance Withdrawal.
In this article, we will provide you with insights that will help you gain benefits other than regular work. Let us dig into the matter to understand it from the basics to its depth.
Table of contents
What is PF Advance Withdrawal?
Provident Fund or Employee Provident Fund, is an obliged saving by a worker that works as their retirement backup. As per the government norms, the EPF or PF has to be 12 percent of an employee’s earnings each month. Similarly, the employer is also obliged to contribute the same share into the employee’s EPF account. Interestingly, with each positive submission of the share without any delay helps the employee gain a good interest annually. Besides this, the employee can withdraw a wholesome amount saved in their PF account post retirement.
When Was EPF Advance Withdrawal Introduced?
EPF advance withdrawal is a new concept that has been brought into the system in 2020 by the Central Government. Earlier, the employees were penalised with a deducted amount in case of early withdrawal. However, keeping pandemic situations and other financial crises in consideration, the policies were changed to facilitate secured financial accessibility for all types of employees.
As per the revised EPF advance withdrawal, a PF holder can withdraw from their account balance an amount that equals to their three months of in-hand salary. Other than this, the dearness allowance or 75 percent of net balance which is low can be considered.
Note that a pre withdrawal of PF amount is a non-refundable process that cannot be redeposited ever after. Also, the withdrawal claims made by the employee can be extended as per the policies and the requirements.
When choosing an online mode of PF advance withdrawal claim, 3 consecutive working days are enough to settle the deal. Whereas, an offline claim can take a minimum of 20 working days.
Should You Withdraw Your EPF Before the Due Time?
This convenience was introduced with the objective to lessen the gap of financial needs required by an employee during or after certain life events. This should surely be an idea of urgencies. Carrying out PF advance withdrawal can result in loss of tax-deductible earnings. Loss of interest is another disadvantage that the person has to face in the future. Therefore, secure and grow your provident fund prosperously until and unless an emergency hits your door.
When Can You Apply For Withdrawal?
An employee has the right to withdraw his EPF funds whenever he wants. But the most that can be taken out is either the entire employee share or six times the employee’s salary, whichever is lower. You are permitted to withdraw for the same reason a maximum of three times.
Conditions Allowed for Partial Withdrawal
Here is the complete list of when an employee can plan a PF advance withdrawal as per the specified requirements:
| Specified Cause for EPF Advance Withdrawal | Limit for PF Advance Withdrawal | No. of Service Years Required | Other Situations |
| Medical Treatment | Lower of below:6 times in-hand salary of each monthorThe total employee’s share+interest, | Null | Medical emergencies of self/ spouse/ children/ parents. |
| Marriage Purpose | Up to 50 per cent of employee’s contribution to EPF | 7 years | For the marriage of self, children, and siblings |
| Qualification Purpose | Up to 50 per cent of employee’s contribution to EPF | 7 years | Either for the account holder’s education or son/daughter’s education (after holder’s marriage) |
| Land Purchase or Construction of a House | For land – Up to 24 times of in-hand monthly income+dearness allowance.For house – Up to 36 times of in-hand monthly income+dearness allowance,The above limits are limited to the total cost. | 5 years | Assets such as. land or the house should be in the employee’s name or if married, jointly with the spouse.It can be withdrawn only once for this purpose during the active service period.The construction should start within 6 months and must be finished within 12 months from the last withdrawn instalment. |
| Home Loan | Least of below:Up to 36 times of in-hand monthly income+dearness allowance, orTotal corpus possession of employer and employee’s share including interest, orTotal outstanding principal amount and interest on house loan. | 10 years | The property should be registered in the name of the PF holder or their spouse or jointly with the spouse.Withdrawal is allowed subject to the furnishing of requisite documents as per the EPFO of the availed housing loan.The accumulation in the member’s PF account (or together with wife/husband) + interest, has to be more than INR 20,000. |
| Renovation Purpose | Least of the below:Up to 12 times the monthly earning + dearness allowance, orEmployees’ contribution + interest rate or Total cost. | 5 years | The property should be registered in the name of the PF holder or spouse or jointly held with the spouseThe below facilities can be availed twice:1. After 5 years of completion of the house,2. After 10 years completion of the house |
| Partial EPF Advance Withdrawal Prior Retirement | Up to 90 per cent of accumulated amount + interest | Once the employee completes 58 years of age, PF advance withdrawal has been availed before a year of retirement. |
EPF Advance – Abnormal Conditions
Here is some more knowledge about EPF Advance Withdrawal exceptional situations to cover some life uncertainties:
1. Handicapped EPF Holders
Members of EPFO can also receive advances for other unusual circumstances. A member who has a physical disability may request for an advance withdrawal to utilise the money to purchase equipment that may lessen their pain. There is no cap on the number of times you can request an advance withdrawal; as long as your EPF account has money in it. The maximum amount that can be taken out of an EPF is six months’ worth of basic pay plus a dearness allowance, the employee’s share with interest, or the cost of the equipment, whichever is the least valuable.
2. Natural Disasters
The wrath of nature has no bounds when she strikes. You are probably short on money if you are one of the people who is affected by an unplanned natural disaster. Your EPF fund will come in helpful at that point. Every time you find yourself in a predicament like this, you apply for it. You are only limited to Rs. 5000 or the employee’s portion of the contribution. A certificate of damage issued by the competent authorities or a declaration from the State Government must be included with the application, which must be sent within four months.
End Thoughts
EPF Advance Withdrawal is definitely a huge shield for private employees who have bigger responsibilities. Especially families who have sole bread earners can be safe in jeopardy. Besides this, government cooperation with withdrawals of up to 36 income deserves to be appreciated. It brings real essence of planning finance even in emergencies at the holder’s best possible capacity.
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Frequently Asked Questions (FAQ’s)
How Much Money Can be Withdrawn Through PF Advance Withdrawal?
Up to 3 months’ worth of PF wages, up to 75% of the total PF balance (employee share and employer share), or the member’s claimed amount, whichever is less.
How Long Does it Take to Receive the PF Advance Withdrawal Amount?
As a result of EPFO rising to the challenge, Covid-19 advances were resolved on average in 72 hours, which is a 50% quicker settlement time.
Can an Employee Withdraw the Entire PF Amount Through PF Advance Withdrawal?
Only after you retire can you withdraw the entirety of your PF corpus. Only after you reach the age of 55 will you be able to retire. You won’t be able to collect your entire corpus if you retire before reaching this age. But, one year prior to retiring, you are eligible to receive 90% of your EPF corpus.
Is There any Tax on The PF Advance Withdrawal Amount?
Within five years of opening an EPF account, tax on PF withdrawals for sums over Rs. 50,000 is 10% with PAN TDS and 34.6% without. Withdrawals from the EPF for amounts greater than Rs. 50,000 after five years have passed since the account’s creation are not taxed.
