The central government is planning major changes in the Employees’ Provident Fund Organization (EPFO). According to sources, under the EPFO 3.0 draft, employees may soon be able to withdraw funds directly from their PF account using ATMs. This facility is expected to begin by June next year, but only a fixed amount will be allowed for withdrawal. This will help employees access emergency funds while ensuring sufficient balance remains for retirement.
Additionally, there are discussions to increase the current 12% contribution by employees towards the EPF. Currently, employees contribute 12% of their basic salary, dearness allowance, and retaining allowance, with 8.33% going into the pension fund and 3.67% into the EPF.
PF Withdrawal Rules in Case of Job Loss:
If an employee loses their job, they can withdraw up to 75% of their PF balance after one month. This allows them to manage their expenses during unemployment. The remaining 25% can be withdrawn after two months of job loss.
Income Tax on PF Withdrawal:
Employees who have completed 5 years of service in one or more companies are not liable to pay income tax on their PF withdrawal. The total service duration must be at least 5 years, but it does not have to be with the same employer.
If an employee withdraws more than ₹50,000 from their PF before completing 5 years of service, they will be subject to 10% TDS. If the employee does not have a PAN card, the TDS will be 30%. However, if the employee submits Form 15G/15H, no TDS will be deducted.
Shashi Rai
