What is PF and EPF, Process for EPF Withdrawal Online Claim

In this blog, there will be detailed information on what is PF (Provident Fund), EPF withdrawal, EPF withdrawal online, and other information on EPF withdrawal online claim.

Employees’ Provident Fund, or EPF, is a government program designed to encourage people to save money while they are working. As a reward for their hard work and dedication to their careers, the EPF aspires to develop a retirement corpus for all employees.

General information on EPF (Employee Provident Fund)

The EPF receives a monthly contribution of 12% of the employee’s dearness allowance and basic income. This contribution is split evenly between the company and the employees. An additional 8.5% interest rate is granted to the employee on the accumulated corpus.

While employees can only withdraw this amount after they retire, they can withdraw a portion of their EPF corpus in the event of an emergency under certain conditions. This condition will be explained in this blog, but before understanding the condition of EPF withdrawal, let’s have a look at what is PF and EPF.

What is PF and EPF?

The Employees Provident Fund and Miscellaneous Act of 1952 established the PF (Provident Fund) or EPF scheme. The Employee Provident Fund Organization establishes all the rules and regulations. The Ministry of Labor and Employment oversees the EPFO’s operations.

In other words, The employee Provident Fund is a fund whose objective is to offer lump-sum payments to employees upon their departure from their place of employment. This is in contrast to a pension fund, which includes both lump sum and monthly pension payments. Employees contribute a portion of their monthly pay to the EPF scheme.

It is a great way for employees to save a percentage of their salary that will come in handy in the event of an emergency or when they retire. EPFO registration is needed by law for employers with more than 20 employees.

Information on EPF Tax Benefits

The contribution to the EPF account made by your company or employer is tax-free. According to Section 80C of the Income Tax Act, you can deduct up to Rs 1.5 lakh for your contribution.

However, if you do not want to participate in the EPF system, you must opt out at the start of your work. You must inform the company of this by completing Form 11. You cannot opt out if you have previously enrolled for EPF and have a valid account.

It is advised that you leave the account open for future rewards. It may raise your take-home pay, but you will need to supplement your income flow in other ways.

Types of EPF Withdrawal

Complete PF Withdrawal

EPF can be completely withdrawn in any of the following situations

1. When a person decides to retire

2. When a person is out of work for more than two months. Individuals must obtain an attestation from a gazetted office in order to make a withdrawal in this situation.

Individuals who have not been unemployed for two months or longer are unable to withdraw their entire EPF balance while changing employers (i.e. the interim period between changing jobs).

Partial PF Withdrawal

Following are the 7 ways in which partial PF withdrawal is allowable

• For the Purpose of Marriage

The withdrawal Limit for the marriage purpose is up to 50% of the employee’s share of contribution to the employee provident fund (EPF).

• Purchase/Construction of a House or Land

Withdrawal limit at the time of construction/purchase of a house or land is described as below

1. For land, up to 24 times the monthly basic pay plus a dearness allowance is available.
2. Up to 36 times the monthly basic pay plus dearness allowance for housing is available.

• For Medical Purpose

For medical purposes, the withdrawal limit is 6 times the basic monthly pay or The total share of the employees plus interest.

• For the Education Purpose

Withdrawal Limit for the education purpose is up to 50 percent of employee’s share of contribution to employee provident fund (EPF).

• For House Renovation

PF withdrawal limit for the purpose of house Renovation is Up to 12 times employee monthly salary plus a dearness allowance, or Total cost, or employee contribution plus interest.

• For Home Loan Repayment

For the purpose of Home, Loan Repayment is Up to 36 times the base monthly pay plus the dearness allowance, or The total corpus, which includes both the employer and employee contributions plus interest, or The total amount owed on a home loan in terms of principal and interest.

• Before Retirement

If a person wants to take money out of their PF account before retirement, they can take up to 90% of their accrued value plus interest.

It’s worth noting that the Employees’ Provident Fund Organization has made the use of Universal Account Number (UAN), mandatory for all employees covered by the Provident Fund Act. The employee’s EPF account is connected to the UAN (Universal Account Number). There is no need to file for Employee Provident Fund (EPF) transfer while changing jobs because the UAN is portable throughout an employee’s lifetime.

Eligibility Criteria for EPF Withdrawal

The prerequisites that an employee must meet in order to withdraw EPF funds are as follows:

1. Only after retirement is it possible to take the entire amount from the EPF account. Early retirement is only considered by EPFO if a person has attained the age of 55.
2. EPFO allows a withdrawal of 90% of the fund one year before retirement.
3. The EPF corpus may be taken if an employee is laid off or retrenchment happens before retirement.
4. Parts of your EPF can only be withdrawn in the event of a medical emergency, property purchase or construction, or higher education.
5. After one month of unemployment, only 75% of the corpus can be withdrawn, according to the new law. Once a person gets employment, the remaining funds will be transferred to a new employee provident fund account.
6. Employees do not have to wait for their employer’s permission to withdraw their EPF (Employee Provident Fund) amount. The approval can receive online by linking their Aadhar and UAN to their EPF account.
7. You must have the following items when filing a claim online::

• An active UAN number
• Bank account numbers are connected to UAN PAN number, and Aadhar number are entered into the EPF database.

Process for EPFO withdrawal online claim

• Login to the UAN Portal
• To verify whether your KYC details, such as PAN, Aadhaar,  and bank details, are verified, go to the ‘Manage’ tab and click ‘KYC.’
• Go to the online service and click on the option to claim (Form-31,19 & 10C)
• Enter your bank details amount and click on verify
• A screen will generate a certificate of undertaking message, Click on yes and proceed
• Once the above step is completed, click on proceed for online claim
• Under the tab ‘I Want To Apply For’ on the claim form, select the claim you want, Form such as EPF portion withdrawal (loan/advance), full EPF settlement, or pension withdrawal.
• To withdraw the funds select PF Advance, and fill in the necessary information
• Submit your application by clicking on the certificate. For filling out the form, you may need to upload scanned documents.

Advantages of EPF withdrawal online claim

Effortless Withdrawal – The online EPF withdrawal claim process saves you the time and effort of going to the PF office and waiting in long lines.

Reduced Processing Time – Online claims are processed and reimbursed to your bank account within 15-20 days after submission. According to government plans, this processing time will be lowered even more.

No need to contact your prior employer for verification – Unlike offline claims, which require the employer to certify your paperwork, online claims are confirmed immediately. This is especially beneficial for people who have recently relocated to a new place because it eliminates the need to ship documents or drive lengthy distances.

Conclusion

EPF scheme is beneficial to all employees in terms of building a retirement fund. In this method, a portion of their monthly salary is withheld and deposited into their EPF account. After the employees retire, the money collected in the Employee Provident Fund (EPF) account is distributed to them.