EPF Withdrawal Rules Amid COVID-19 Crisis, Know How to withdraw EPF from your account

Last Updated On: April 26, 2021, 9:29 p.m.
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PF WITHDRAWAL RULES AMID COVID-19 CRISIS

The government announced back in March 2020 that an individual can withdraw a certain sum from their Employees' Provident Fund (EPF) account, if he/she is facing financial problems due to the coronavirus-related lockdown.

The government has notified amendment in EPF scheme rules regarding withdrawal of funds from the EPF account to deal with coronavirus-related financial exigencies. According to the amended rules, a member can withdraw an amount equal to three months of basic salary and dearness allowance (DA) or 75 per cent of the credit balance in the account, whichever is lower for them.

So, for example, in case you have a balance of ₹1 lakh in your provident fund account and your three months’ basic pay and dearness allowance add up to ₹45,000, then you can withdraw up to ₹45,000.

Such withdrawals are generally processed within three days of receipt of claims.

However, if you are planning to opt for such a withdrawal from the provident fund, it’s important to understand the tax implications.

As these withdrawals are made due to covid-related stress, the government has made such withdrawals tax-free in the hands of employees.

Apart from this, the EPFO allows taxpayers to withdraw partially for specific purposes such as buying a house, child’s education, marriage, etc. These withdrawals are generally allowed after five years’ service and are hence tax-free.

 

The EPF balance can also be fully withdrawn after two months of unemployment.

Eligibility to apply for withdrawal
To apply for claim online, an EPF account holder should satisfy these three conditions:
a) Universal Account Number (UAN) of the EPF member must be activated
b) Aadhaar number should be verified and linked with UAN
c) Bank account of the EPF member with correct IFSC should be seeded with UAN.

 

Taxing times

  • Funds withdrawn from the EPF for reasons other than covid before the completion of five years of continuous service will be Taxable under Income Tax Act.
  • If the PF outstanding balance is withdrawn before five years of completion of service, then it is taxable under the income tax law. If the withdrawal amount is more than ₹50,000, then tax is deducted at source (TDS) at the rate of 10% under Section 192A.
  • In case of absence of PAN, TDS will be deducted at the rate of 30%. Also, in case the withdrawal amount is less than ₹30,000, TDS deduction is not required.
  • Apart from this, the taxpayer will have to show the receipt in the income tax return (ITR). The deduction claimed against the employee’s contribution under Section 80C has to be reversed.
  • It is slightly complicated to show the receipts in the ITR in the absence of specific provision. However, one can show both the employee and employer contribution under the head ‘salary income’, while interest earned can be shown under the head ‘income from other sources
  • Also, if TDS was deducted, don’t forget to adjust your tax liability by the same
  • There are certain other exemptions that are available to employees under which withdrawals from the provident fund account are not taxable even if they are made before the completion of five years.
  • “If an employee has been terminated due to ill health or the employer’s business is discontinued or the withdrawal is beyond the control of the employee... then the withdrawals are not taxable even if they are made before five years of completion of continuous employment
  • If the employee transfers the provident fund balance from one employer to another in case of job change, there are no tax implications.
  • So, if you are facing any financial stress due to covid, you can dip into your provident fund account

 

How to apply for withdrawal:


Step 1: Visit the Member e-Sewa portal: https://unifiedportal-mem.epfindia.gov.in/memberinterface/


Step 2: Login to your account by entering your UAN, password and captcha code.
 

Step 3: Go to Online services and select claim (Form -31, 19,10C and 10D)
 

Step 4: A new webpage will appear on your screen with all your details such as name, date of birth, and last four digits of your Aadhaar number. The webpage will ask you to enter your bank account number. Enter your bank account number in the required space and click on verify. A pop-up will appear on your screen asking you to give a 'Certificate of undertaking'.
 

Step 5: Once the bank account number is verified, then click on 'Proceed for online claim'.
 

Step 6: From the drop down menu, you will be required to select 'PF advance (Form 31)'.
 

Step 7: You will be required to select purpose of withdrawal as 'Outbreak of pandemic (COVID-19)' from the drop down menu.

 

Step 8: Enter the amount required and upload the scanned copy of cheque and enter your address.
 

Step 9: A one-time password (OTP) will be sent on your mobile number registered with Aadhaar.
 

Step 10: Enter the OTP received by you via SMS.
 

Withdrawing via EPFO's Umang app:


Step 1: Login to Umang App
 

Step 2: Select EPFO
 

Step 3: Select 'Employee Centric Services'
 

Step 4: Select the option 'Raise Claim'
 

Step 5: Enter your UAN details and click on 'Get OTP' to get one-time password to login in your account.
 

Step 6: Enter the OTP and click on login. Once you are successfully logged in to your account, enter last four digits of your bank account and select the member ID from the drop down menu. Click on 'Proceed for claim'.
 

Step 7: You will be required to enter your address. Click on 'Next' once the correct details are entered.
 

Step 8: Upload the cheque image. Once all the details and required information is entered, then your claim will be filed.

 

How to check the status of the claim
To check the status of the claim you filed, you can log in to your account on the Member e-Sewa portal. You can check the status by clicking on 'Track Claim status' under the 'online service.

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