After a month of unemployment 75% of EPF can be withdrawn
EPF is a long-term retirement savings project. Thus, it can be fully withdrawn only after retirement (100%). And early retirement is not considered until the person is 55 years of age. However, if you are unemployed for less than 2 months, you can withdraw 100% of the outstanding EPF in your account as per the old rules of Section 69 (2) of the EPF Act.
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| EPF NEWS FOR JOBLESS |
Now, the EPFO has made the Employees Provident Fund Withdrawal Rules more flexible in case of job loss and has introduced a new rule under 686H.
A new section, 68HH, has been inserted in the 1952 EPF Act after para 68H.
Accordingly, if a person is unemployed for less than 1 month, he/she can withdraw up to 75% of the outstanding EPF balance in his / her account. The department said that even after such withdrawal, the individual will be eligible for EPF share and pension benefits. However, the advance cannot be returned to the EPF as it is not refundable.
In addition to these, the notification clearly states that para 69 (2) (old rules) is still in force. That means, after two months of continuous unemployment, 100% EPF withdrawal is allowed. However, the 2-month waiting period does not apply to a woman who has retired from services for the purpose of marriage.
When and how much you can withdraw after jobless
The Employees Provident Fund Organization (EPFO) allows customers, who have since become unemployed, to withdraw money from their PF accounts. It not only helps people who have suffered job losses, but also those who have taken subtotal from work or are trying their luck as a startup entrepreneur.
The EPFO Rules state that unemployed EPF account holders will be able to receive non-refundable advances up to .5% of their balance after being unemployed for more than one month. You are also not considering submitting any documents related to unemployment to the EPFO as a break in the EPF deposit is considered a sign of unemployment.
The advantage of taking an advance is that your PF account membership remains intact so you can transfer the rest of your balance to a new employer. If you have an active account, you can also draw a pension at retirement.
If you have been unemployed for two months, you can withdraw the entire PF corpus and close your EPF account. According to the EPFO order, the requirement of waiting for 2 months does not apply to women who resign from their jobs due to marriage.
Those who have passed 544 years after the age of 44 are allowed to withdraw up to 90% of their PF balance, however, any time after retirement within one year of retirement.
Income tax on withdrawal of EPF
If the EPF is withdrawn after 5 years of uninterrupted service, the amount raised (both principal and interest) is exempt from tax, said Arkit Gupta, founder, and CEO of Cleartax. If withdrawal occurs before the end of 5 consecutive years of service, it is fully taxable.
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