There can be situations when you need to access your retirement savings before exiting the workforce, especially if you do not have enough money set aside for emergencies. These could include funding medical expenses, a family member’s education or marriage, or even getting your house renovated.
The Employees’ Provident Fund Organisation () allows members to make partial withdrawals, known as EPF advances, for certain purposes, with eligibility conditions and limits on how often they can be claimed.
However, one must remember that if provident fund is withdrawn before completing five years of continuous service and the withdrawal amount exceeds ₹50,000 in a financial year, it becomes taxable. Here are some of the circumstances in which employees can withdraw their PF savings in advance.
You can withdraw PF amount during unemployment
One of the biggest changes concerns how much of their provident fund corpus employees can withdraw if they resign without having another job offer or lose their job for any other reason.
EPF members can now withdraw up to 75% of their immediately after losing or leaving a salaried job. Meanwhile, the remaining 25% of the EPF balance will become available only after you complete 12 months of continuous unemployment.
EPF advance for education
For education-related expenses for themselves or their family members, EPFO members are allowed to make withdrawals. This facility can be availed up to 10 times during the entire EPF membership.
EPF withdrawal for medical needs
Medical treatment falls under the essential-needs category, with the revised rules giving individuals greater flexibility to use their EPF savings for urgent or substantial medical expenses.
Unlike some other withdrawal categories, illness-related withdrawals are not subject to a fixed limit on the number of times a member can seek an advance, subject to the applicable rules.
How much PF can you withdraw for marriage?
Salaried employees can also withdraw funds for marriage expenses of self or eligible family members. Such withdrawals are permitted up to five times during the EPFO membership period.
Can you fund housing needs using EPF advance?
Yes, the retirement fund body allows members to make advance withdrawals for several housing-related purposes, which can include the following reasons:
- Purchase of a flat, house or residential plot
- Construction of a residential property
- Repayment of a home loan
- Renovation or improvement of a house
Withdrawals for such purposes can be made up to five times during the EPFO membership, subject to eligibility conditions.
PF withdrawal under special circumstances
EPFO members can also apply for EPF advances under certain special circumstances notified by the Central Board of Trustees (CBT), EPF. Such withdrawals are allowed up to two times in a financial year.
Uniform withdrawal limit
According to the EPFO’s latest guidance, members who have completed 12 months of EPF membership can withdraw up to 75% of their total EPF balance as an advance. This includes the employee’s and employer’s contributions, along with accrued interest.
However, the amount a member can actually withdraw depends on the purpose of the advance and the eligibility conditions applicable to that category.
How much tax is applicable on advance withdrawals?
If EPF is withdrawn before completing five years of continuous service and the withdrawal amount exceeds ₹50,000, is deducted at 10% provided the employee has furnished PAN details.
If PAN is not available, then TDS (tax deducted at source) may be applicable at a higher rate of 20%, according to a Cleartax report.
However, employees whose total taxable income, including the EPF withdrawal amount, falls below the taxable limit can submit Form 121 to avoid TDS deduction. In such cases, no TDS is deducted if the form is validly submitted.