Provident Fund – Latest Changes in Withdrawals that everyone should know

Employee Provident Fund

The Employee Provident Fund Organization (EPFO) has been working on various possibilities to ease the process of PF withdrawals, resulting in some changes.

Highlights of the changes:

    1. The withdrawal of the PF money can be done only after two months of employment cessation.
    1. Any PF withdrawals after five years of continuous employment will attract no tax liability. This is done in order to encourage people towards long-term savings.
    1. 5 years of employment with two different employers would still be considered as continuous employment, as long as the PF from the previous employment is transferred to the new one.
    1. PF withdrawals within 5 years of continuous employment would be taxable for the same financial year.
    1. The contribution of the employer towards the PF and the subsequent interest earned will be taxable.
    1. In case of unavoidable circumstances like health issues or termination of the employer, the withdrawals will not attract any tax liability.
    1. When the PF contributions are declared under Section 80C, then it will be considered as income from other sources and would attract tax liability.
    1. When the PF withdrawals are transferred to the account of the National Pension System (NPS), again the amount is not taxed. This is based on the fact that the amount cannot be treated as an income for that year.
    1. Whenever the person holds an appropriate Aadhar card and bank account details, then there is no need to get the attestation of the previous employer for the PF withdrawals. Otherwise, the PF withdrawal form needs to be attested by the previous employer.
  1. Partial withdrawals or advance payment for reasons like the purchase of property, children’s education and marriage, etc. are also allowed.

LEAVE A REPLY

Please enter your comment!
Please enter your name here