Are you thinking about withdrawing your PF? There’s good news in store for you. The Employees’ Provident Fund Organisation will soon be launching a new feature on their website that will enable users to withdraw their PF online.
What you need to know about the proposed PF withdrawal
- About 1 crore claim applications are submitted to the EPFO for withdrawals, pension fixations of group insurance benefits.
- At present, most claims are settled within 20 days, the stipulated time by the EPFO.
- The EPFO now plans on settling claims within just a few hours from the time of receiving the application.
- A pilot scheme was carried out under which the EPFO connected over 50 field offices with their central server.
- The connections for 123 offices are in the pipeline.
- Once this is done, subscribers will be provided more online services.
- Furnishing Aadhaar details has been made mandatory for every subscriber. The deadline has been set as 31st March 2017.
- For better identification, furnishing details of Aadhaar seeded bank accounts would be helpful to the EPFO.
Should you withdraw your PF?
- The Employees’ Provident Fund was set up to encourage savings towards retirement.
- Withdrawing money from the retirement corpus is not advisable unless it is absolutely unavoidable.
- An employee’s fund will build up over the years as 12% of the basic salary is deposited every month along with a matched contribution from the employer. Out of this, 8.33% is deposited into the Employees’ Pension Scheme.
- If a person continues to save over their working period, a significant amount will get saved and will come in handy when it comes to retiring.
- Tax laws have been formed to discourage withdrawing early from PF accounts.
Tax Deducted at Source on PF Withdrawals
- If PF withdrawal is made before completing five years of continuous service, the amount withdrawn will be taxable.
- If PAN is registered, then 10% tax will be applicable on the taxable withdrawal amount.
- If PAN is not registered, 34% tax will be levied on the taxable withdrawal amount.
Tax Exemptions on PF Withdrawals
- If a salaried employee makes a PF withdrawal after continuous service of five years, then there will be no TDS deduction on the amount.
- If the withdrawal amount is below Rs.30,000, no tax will be applicable.
- If an individual’s income is below the basic exemption limit (taking into account the PF withdrawal amount), then they can submit Form 15G and avoid tax.
- For amounts of up to Rs.3 lakhs for senior citizens, Form 15H can be submitted if their income is below the taxable amount.
- If a PF transfer is made, there will be no tax applicable.
- If the employee is terminated on account of bad health (of the employee), dissolution of the business or other reasons not in the domain of the employee, withdrawals may be exempt from tax.
If the EPFO’s plans to provide more online services on the online portal goes well, subscribers will benefit greatly. Currently, subscribers face many issues with getting their PF details, withdrawals and UANs from employers. They also face many issues online with accessing their accounts on the EPF portal. Upgrading the current system would help subscribers get better services and quick turnaround times.