Step-by-Step Guide: EPF Pension Contribution Withdrawal

How to Withdraw Your EPF Contribution in a Few Simple Steps

Employee’s Provident Fund, short for EPF, is a savings scheme considered a sound financial investment as it is run under government supervision. The EPF, also popularly called PF, is a way to accumulate long-term savings for employees during their years of service or employment, and it is a way to provide financial security as a part of their retirement settlement. The savings add-up through the years of work experience and the funds thus accumulated, along with the earned interest are then available to be withdrawn on or before retirement.

For many people, the EPF funds are a big part of their retirement funds and lifetime savings. By learning about the withdrawal of one’s EPF pension amount, one can be better equipped to utilize it as an effective savings vehicle for various financial goals.

Understanding the process of withdrawal from EPF is a key aspect of financial literacy in India, especially if it forms a large part of your savings. In this guide, we take you through the process of withdrawing your EPF amount, including the different modes of withdrawal, both online and offline. We also cover crucial aspects, such as eligibility, documents, and tax implications of EPF contributions.

What is the Employee Pension Scheme (EPS) and how does it work?

EPS is an integral part of the Employees Provident Fund that provides pensions to employees from the time of retirement or disability. This scheme ensures that a proportion of your EPF contributions both from you and your employer are credited to the EPS account. The basic objective of EPS is to stabilize the income after the retirement of an employee.

Working of EPS:

- Contribution: A part of the contribution from the employer and employee gets credited into the EPF account with a percentage towards EPS.

- Accrual: Pension is subject to the number of years of service in addition to your basic salary. The higher the years of service, the better the pension drawn after retirement from service.

- Pension Payment: After spending 10 years of service or after attaining the age of 58 years, you become eligible for availing the pension monthly from EPS.

When Can You Withdraw Your Pension Contribution?

The withdrawal of pension contributions depends entirely on the circumstances of each individual. Here are different case examples for when one might need to withdraw:

• Early Withdrawal

  Early withdrawals are well suited in case of emergencies that demand immediate financial support. In these scenarios, one is allowed to withdraw the EPS amount before the completion of the standard service period.

Here is an easy-to-understand example:  

Lekha aged 45 years old has been working for 5 years. Right now, she is exploring different sources of financial support to pay for a medical condition. In this instance, an early EPF withdrawal is an option she can consider. However, she must also verify if doing so will affect her pension benefits and whether it will attract taxes.

• Full Withdrawal

Full withdrawal from EPF is normally applicable at retirement or when leaving a job after having served a considerable period. For example, Manoj aged 58 years has had 10 years of service in an organization and can look at a full withdrawal of his EPF balance.

• Partial Withdrawal

The partial withdrawal option is most appropriate for someone who is retiring or nearing the end of a serving period or is moving onto a new career phase. It can provide timely financial support during medical emergencies, education expenses, or while purchasing a larger asset such as a home.

For example, Ashok aged 35 years old requires immediate financial assistance to fund his child’s education. In this case, Ashok can opt for a partial withdrawal of his EPF amount; the amount withdrawn depends on the objective and your EPF balance.

How Much Can You Withdraw from Your EPF Account?

Depending on the kind of withdrawal and the period of service, you can make a complete or partial withdrawal from your account. Here is how it works:

- Full Withdrawal: The option of withdrawing the entire amount of EPF balance with contributions and interest, becomes applicable when one retires or leaves a job.
- Partial Withdrawal: Partial withdrawals, done for specific purposes, are subject to EPF regulations and balance in the PF account of the holder.

Documents Required for EPF Pension Contribution Withdrawal

Here is a list of documents that are required for the process of withdrawal of EPF pension contribution:

• EPF Account Number: A 22-digit alphanumeric number that is assigned to the employee at the time of joining the organization.
• Aadhaar Card: Required to verify identity as well as its linkage with the respective EPF account. 
• PAN Card: For income tax purposes
• Details of the bank account: To where the withdrawn amount gets credited.
• Form 19 and 10C: Required for withdrawal filled with all the necessary details.
• Proof of Employment: To confirm the service period.

Eligibility Criteria for EPF Withdrawal

You can withdraw EPF amounts after completing 58 years of retirement.
But, there are a few rules specifying the eligibility criteria to withdraw EPF:

- Service Period: In general, you should have a minimum of 5 years of service.

- Change of Job: You can withdraw the EPF amount if you are changing your job or you wish to discontinue the EPF account.
 

EPF Pension Withdrawal Online Process

How to withdraw the EPF amount online:

• Step 1: Login on the EPFO Portal
  Activate your login at the EPFO portal with a UAN number.
• Step 2: KYC Details Shall be Verified
  Ensure that your KYC details are in sync. This should include Aadhaar, PAN details and details of the bank account which is in your name.
• Step 3: Choose the 'Online Services'
  To the 'Online Services' tab click on 'Claim (Form-31, 19 & 10C)'.
• Step 4: Fill the details
  Fill up your information including your EPF account number, the purpose of withdrawal, and the amount to be withdrawn.
• Step 5: Submit Claim
  Check the details once again, then submit it. You will get a claim ID that may track the claim.
• Step 6: Approval and transfer
  Once the EPF is processed and approved, it will be directly transferred to your bank account.

Offline EPF Withdrawal Procedure

To initiate an offline EPF withdrawal, follow this procedure.

• Step 1: Collect Forms
  You can collect Form 19 and Form 10C from EPFO or simply download them from the official website of EPFO.
• Step 2: How to Fill the Forms
  You would need to fill in all the fields in the forms and ensure to mention the correct EPF account, reason for withdrawal and all other personal details.
• Step 3: Attach Documents
  Keep at hand and include documents like your Aadhaar card, PAN card, and details of your bank account that are linked to your PF account. This is where the credit of proceeds will be done.
• Step 4: Form Submission
  Submit the complete form with attachments to your regional EPFO office.
• Step 5: Processing
  The EPFO will process your request and deposit/credit the amount of the PF withdrawal in your linked/authorized bank account.

What Should You Do if Your Application for EPF Withdrawal Gets Rejected?

If your EPF withdrawal application gets rejected, you should do the following:

• Review Rejection Reason: Check the reason for rejection that EPFO has communicated to you.
• Correct Errors:  Check for incomplete discrepancies in the forms and correct them on the application.
• Resubmit: Resubmit your application with accurate details.
• Call EPFO: You may get additional support from the call centre or at the office as well.

How to check the status of my EPF withdrawal request?

To find the status of your EPF amount withdrawal request, you can do the following:  

- EPFO Portal: Access the EPFO portal with your UAN and see if your claim status is available in the 'Online Services' section.
- SMS Services: EPFO SMS services can be accessed by sending an SMS containing your UAN and claim ID to the given number.
- Contact EPFO: If there are updates, then the service can be taken from the related EPFO office.

Tax Implications of EPF Withdrawals

The tax implications of EPF withdrawals need to be known beforehand so that there is no surprise element later on. 

• Taxation Rules

- Before Completion of 5 Years of Service: In case a withdrawal is made before completion of 5 years of service, then the amount is taxable.

- Withdrawals beyond 5 years: Most of the time, the withdrawals after 5 years are tax-exempt.

• Tax Benefits and Exemptions

As per Section 10(12) of the Income Tax Act, withdrawals of EPF are entirely tax-free if the contributions made towards EPF are filed under Section 80C, Income Tax Act

Recent Changes and Updates to EPF Withdrawal Rules You Should Know:

Improved Online Facilities: 

Improved online facilities allow easier withdrawal of EPF.

Retiring Age: 

Updating of the retiring age of an employee to withdraw his/her EPF.

Tax Exemption Limits Revised:

Updating of tax exemption policies and limits.

Knowing the process of withdrawal of EPF may make all the difference in proper financial management. Whether you want to withdraw your EPF pension contribution online or offline, there are certain rules, eligibility criteria, and necessary documents that will help you face fewer hassles during withdrawal. This will also enable you to keep updating yourself regarding the latest EPFO PF withdrawal rules and changes for informed decision-making about your EPF contributions.

For more information on taxation rules for pensions, withdrawing your pension money quickly, NPS and PPF for retirement, PRAN number, Pension Payment Order, and Voluntary Retirement Scheme check out our blog pages for comprehensive insights.

Shriram Life Insurance provides a range of life insurance products to enable individuals to manage their risks better and also save up funds towards their financial goals. It encourages people to be responsible about financial planning and creating a portfolio of investments that will serve their long-term needs while protecting them from uncertainty of life.