EPF Withdrawal Rule: The central government is considering making a big change in the rules for withdrawal from EPF account. Now the Provident Fund account holders (EPF subscribers) can be allowed to withdraw their entire deposit amount or part of it once every 10 years. Currently, salaried employees have to wait till retirement to withdraw the entire amount.
Complete withdrawal every decade?
Two senior government officials told that the central government is seriously considering the proposal of EPFO (Employees’ Provident Fund Organisation). Under this proposal, members will be able to withdraw money from their account every 10 years.
What are the rules right now
At present, full withdrawal from EPF is possible only in two situations – when the member retires (usually at the age of 58), or when he remains unemployed for more than two months. Apart from this, partial withdrawal from EPF is allowed under certain circumstances.
Convenience for young employees?
If this proposal is implemented, young members will be able to withdraw their entire EPF amount even at the age of 30 or 40. However, an official also indicated that the government may limit the withdrawal to only 60% and not the entire amount. This option is currently under consideration.
What is the aim of the government?
According to an official, “Most of the policy relaxations related to EPF in the last one and a half years have been brought with the aim that members can use their money in a more flexible and convenient manner. The proposal of 10-year withdrawal is also part of this thinking.”
Benefit or risk?
However, not all experts fully agree with this proposal. They believe that even though this scheme provides short-term relief, it may weaken the basic spirit of EPF. According to experts, the purpose of EPF is to create a safe fund for retirement, not to meet short-term needs. Akshay Jain, partner, Saraf and Partners, says, “The terms and conditions of any such offer should be carefully crafted so that short-term financial needs do not outweigh long-term security.”
What will be the benefit?
Rohitashv Sinha, partner at King Stubb & Kasiva, believes that greater access to PF can increase liquidity in the market, especially in the real estate sector. This will benefit both the economy and the employed. However, Sinha added that frequent withdrawal exemptions can lead to a reduction in savings for the future, especially when the money runs out at the time of need.
IT system can create bottleneck
Experts have also warned that before implementing such changes, EPFO will have to strengthen its IT infrastructure. The existing system is not capable of handling frequent withdrawal requests and processing. This can increase the risk of fraud and irregularities.
Recent changes in withdrawals
Currently, partial withdrawal from EPF accounts is allowed only for certain specific needs, such as home purchase, treatment, education or marriage. But recently the rules have been relaxed. From July 2025, members can now withdraw up to 90% of their EPF funds to buy land or build a house. Earlier this facility was available only to those who had contributed to the account for five consecutive years, but now this limit has been reduced to three years.
Auto-settlement limit increased
EPFO issued a notification on June 24 stating that the limit for auto-settlement without additional approval for advance claims has been increased from Rs1 lakh to Rs 5 lakh. The purpose of this is to enable members to get funds quickly in case of an emergency.