January 23, 2016

How to withdraw EPF amount online & TAX deduction rules

The Employees' Provident Fund Organisation is going to launch online PF withdrawal very soon. As of recent news, the retirement body is working for online withdrawal system to be highly secured since it is matter of transferring the money directly to members' bank account.

The provident fund organisation announced registration of Universal Account Number is mandatory for existing members and distributed over 4 crores of portable numbers already. The portable number can be used throughout life time of subscribers and it has to be linked with AADHAAR number for verification to avail online withdrawal facility in future. Though Universal Account Number does not requires your bank account number during registration and accessing login area, associating bank account details with UAN will be essential to use online withdrawal later.

The member must be unemployed for at least two months after resigning from organisation is eligible to withdraw balance amount. At present, the member has to submit withdrawal claim form physically. The withdrawal claim FORM will be verified along with necessary documents such as photocopy of your Bank Passbook and PAN card.

The members need not to submit Claim FORM physically to PF office. It will be will be taken care by either HR department or Finance department of your company. The FORM 10C and FORM 19 can be used for withdrawing EPS balance and EPF scheme respectively. The member can know current withdrawal status after submitting withdrawal FORM through online.

The bank account number and branch details has to be filled in both FORM carefully in order to avoid failure in transaction. The EPFO will credit money directly to your bank account through online NEFT transfer. The body announced submission of PAN detail is mandatory for deducting applicable tax at source. After successful transaction to your bank account, the members may receive message from EPFO about successful credit of accumulated balance amount.

Please note: The EPF and EPS settlements will be processed separately. The accumulated money with interest will be transferred to your bank your in two spell. There might be time gap in crediting EPF money and EPS money in days or hours. Your premature withdrawal of pension scheme (EPS) will not carry any interest.

How much time will be taken to withdraw PF amount?

The provident fund organisation reduces withdrawal timeline from 30 days to 20 days to settle EPF, Pension Scheme and Insurance claims. After online withdrawal is introduced, it will be done in just 3 hours. As per the recent news, the ministry has proposed to Government to bring cap on premature PF withdrawal. Thus will bring in only transferring available money to new EPF account.

New TAX deduction rules on EPF withdrawal

The Employees' Provident Fund Organisation of India has introduced new EPF Taxation Rules on withdrawals. As per the recent circular, there will be 10% of tax will be deducted at source (TDS) for EPF members. The rule is applicable for all existing and newly joining members who is going withdraw provident account balance amount for more than Rs. 30, 000 within the service period of less than 5 years. The failure of submitting PAN details during withdrawal request will cause highest tax deduction equal to 34.608% from total withdrawal amount.

However, the tax will not be deducted during the settlement or premature withdrawal under the following conditions:
  1. The accumulated provident fund balance is less than Rs. 30, 000.
  2. The provident fund balance is more than Rs. 30, 000 and the subscriber submitted PAN, FORM 15G (other than senior citizens) or 15H (for senior citizens) to state (self-declaration) that income is less than taxable limit along with FORM 19.
  3. Transferring fund balance from one account to another PF account.
  4. The total service period is more than 5 years added with previous service period.
  5. Exiting from service due to illness, company loss and completion of project contract.
10% tax will be deducted if settlement amount is more than Rs. 2,50,000 (up to 60 years) and Rs. 3, 00, 000 (above 60 years) even though submission of PAN, FORM 15G or 15H.