Want to withdraw money from Employee Provident Fund account? Its taxable if done before 5 years of service

An amount of 12 percent of your basic salary goes towards the Employees Provident Fund Organisation of India (EPFO). A matching amount is contributed by the employer, too. The money deducted is given to the employee when the person is unable to work or when he/she retires. Contribution towards an EPF account provides a benefit to individuals by way of a deduction under Section 80 C, says Archit Gupta, Founder and CEO, ClearTax. However, an employee can withdraw his/her PF even when the work period is less than five years (60 months). But do remember, income tax (TDS) is deducted. However, income tax will not be deducted on withdrawal of PF after five years of continuous service.  However, TDS is deducted at 10 percent if the member submits PAN in such cases. In case PAN is not submitted, then TDS at 34.608 percent is deducted. No Income Tax (TDS) is deducted in case the total balance is less than Rs 50,000. How to withdraw your PF online?  Read here . Early withdrawal of PF is allowed under these circumstances (i) Housing loan/Purchase of site/house/flat or for construction/addition alteration in existing house/repayment of housing loan: No document is required. New declaration form/utilisation certificate required earlier has been discontinued (ii) Illness of member/family: a) Certificate of doctor, and b) Certificate by employer that ESIR facility is not available to the member may be submitted by the member [caption id=“attachment_614708” align=“alignleft” width=“380”]  Reuters[/caption] (iii) Marriage of self/son/daughter/brother/sister: No document/marriage card is required (iv) Post-matriculation education of children: No document is required (v) Lockout or closure of factory/cut in supply of electricity: No document is required (vi) Natural calamity: No document is required (vii) Purchasing equipment by physically handicapped: Medical certificate is required (viii) One year before retirement: 90 percent of total PF balance can be withdrawn. No document is required (ix) Investment in No Income Tax (TDS) is deducted in case the total balance is less than Rs 50,000. : 90 percent of total PF balance can be transferred to LIC. No document is required. 2) No revenue stamp (Re 1) is required to be affixed by the member 3) Income Tax (TDS) is deducted if the service is less than five years (60 months). No Income Tax (TDS) is deducted in case the total balance is less than Rs 50,000. However, TDS is deducted at 10 percent if the mmber submits PAN in such cases. In case PAN is not submitted, then TDS at 34.608 percent is deducted. 4) The total service in the present establishment, as well as previous establishment, is counted and, therefore, it is advisable to merge all PF accounts 5) Pension withdrawal benefits can be availed only if the service is less than 10 years. The following table will help you easily understand the taxability on withdrawal of EPF:

  Why early withdrawal of PF should be avoided EPF also offers other benefits like using funds for equipment purchase in case of differently-abled and natural calamity damages, etc. which an employee can use at the time of need. A member also has an option to nominate family members to receive funds after his demise and should be aware that withdrawing funds after job change is legal only when you are jobless for at least two months. The primary goal of EPF is long term investment and it should be used only when it is the last option available for an employee.