EPFO New Rules: If you plan to withdraw money from your EPF, you must know these rules first. Under the new EPF scheme, the process for making advance withdrawals from your PF account has changed. The biggest change is the mandatory requirement to maintain a minimum balance of 25% in your PF account at all times; this means you can no longer withdraw the entire balance.
Additionally, new guidelines have been introduced for withdrawals for marriage, education, medical treatment, home purchases, and other essential needs. Let us explore these new PF withdrawal rules and understand when you can withdraw funds during your employment.
What is the 25% PF rule?
According to the new rule, 25% of the total accumulated amount in your PF account must remain in the account. You can withdraw only 75% of the funds. This effectively ensures that a portion of the money remains secure for the employee’s retirement. Notably, the term “Eligible Member Balance” has been introduced under these new regulations.
Simply put, 25% of the funds in your PF account are set aside, allowing you to withdraw the remaining 75%. The “Eligible Member Balance” determines how much you can withdraw for specific needs.
For instance, if you have ₹10 lakh in your PF account, ₹2.5 lakh must remain in the account, and you can withdraw the remaining ₹7.5 lakh under the rules.
When can money be withdrawn?
The EPF scheme allows advance withdrawals for specific needs. These include purchasing or constructing a house, buying land, repaying a home loan, home repairs, education, medical treatment, and other special circumstances.
How much money can be withdrawn for home construction or home loan repayment?
If you wish to purchase a home or undertake home repairs… If you are repaying a home loan, eligible members can withdraw up to 100% of their balance as an advance, subject to the prescribed conditions.
How much can be withdrawn for medical treatment?
If you need funds for the medical treatment of an employee or a family member, eligible members can withdraw up to 100% of their balance.
How much can be withdrawn for education?
You can withdraw up to 100% of your eligible balance for education, either for yourself or a family member. An EPFO member can make such advance withdrawals up to 10 times. Once this limit of 10 withdrawals is reached, you can no longer withdraw funds for education.
How much can be withdrawn from the PF account for a wedding?
If a family member is getting married, you can withdraw 100% of the eligible member balance. You can avail of this facility a maximum of 5 times during your entire tenure of employment.
Funds can also be withdrawn for other needs
If you are in need of money due to an emergency, rules allow you to withdraw up to 100% of the total funds available in your PF account as an advance. In times of distress, you are permitted to withdraw the entire amount—excluding a mandatory 25% of your PF balance—as an advance.
What are the conditions for withdrawing an advance?
Generally, to withdraw an advance from your PF account, you must have been an EPFO member for at least 12 months; however, different rules may apply in specific cases, such as when you leave a job.
What is the 5-year service rule?
This is not directly linked to permission to withdraw funds; rather, if an employee has served continuously for 5 years, it affects the tax liability on the PF withdrawal. In other words, the 5-year rule applies only to taxation, not to withdrawing advances.
What documents are required to withdraw money from the PF account?
To file an online claim, you need an Aadhaar-linked UAN, completed KYC, a bank account linked to the UAN, and a PAN card (if required). Depending on the reason for withdrawal, you may need specific documents—such as medical records for treatment, admission documents for education, or housing-related papers.
If KYC is complete, you generally don’t need physical documents for most online claims, though the EPFO may ask for additional documentation if needed. The new rules do not alter the EPF contribution or interest calculation methods; these remain unchanged.
Is withdrawing PF money the right move?
According to the EPFO, the PF fund should be viewed as retirement savings. Therefore, withdraw only when you have a genuine need. If you have completed five years of service, first understand the tax implications and withdraw only the amount you actually need. The higher the savings in your PF account, the greater the benefits you will receive at the time of retirement.