Every salaried individual has an EPF a/c. EPF a/c includes equal contribution by the employer and employee(salaried individual). Every EPF a/c holder will be allotted a Universal Account Number(UAN) where the EPF holder can trace his balances from time-to-time.
EPF Withdrawal Terms and Conditions–
The Regulatory Body EPFO(Employees Provident Fund Organisation) has amended the rules in 2018 by
1.Allowing the EPF holders to withdraw “75%” of the accumulated EPF balance; if the employee was unemployed for more than 1 month
2.The Remaining “25% Corpus” can be withdrawn if he/she still unemployed for more than 2 months.
This amendment was passed by EPFO in December 2018 allowing to withdraw the accumulated corpus “Online” using UAN Number.
Even though EPFO amended the law, it is not recommended to withdraw the corpus as it is meant for retirement . To lead Post-Retirement life happily and securely EPF is an option.
Besides this, The Income Tax laws also not favour pre-mature withdrawal. The withdrawals would be subject to tax if-
1.It would be “Taxable” if the employee doesn’t engaged in the organisation of atleast 5 Years continuously in the organisation
2.If the employee shifted from one job to another within 5 Years, it would be taken into consideration for calculating continuous Period
3.It would be ”Taxable” in the applicable Financial Year when you withdrawn the EPF Corpus before the 5 Years continuous employment period
4.EPF includes employers contribution;interest earned on it;employees contribution and interest earned on it which were “Taxable’ differently
5.Employees own contribution is ”Not Taxable”. But it would be applicable if he doesn’t claims it under section 80(c)in income tax returns. If he claimed it, it would be “Taxable” under the head- ‘Income From Salary”. The interest earned on the employees would be “Taxable” under “Income From Other Sources”
6.Likewise Employers contribution would also be taxable under “Income From Salary” if the continuous employment doesn’t Qualify for 5 Years
7. TDS of 10% would be levied if the EPF corpus would be withdrawn before 5 Years of continuous employment
8. The employee can avoid “TDS” if the amount is less than 50,000 rupees in case,if it is above 50,000 rupees he can claim deduction by submitting 15G(For General Public)and 15H(For Senior Citizens)if there is no tax liability for that financial year.
This income tax laws can be applicable, if the subscriber withdraws EPF Balance before continuous employment of 5 Years. If he/she has completed their service for more than 5 Years, they can withdraw the accumulated corpus without any clauses.