Want To Withdraw Your EPF Corpus? Here’re The Facts That You Must Consider

Due to the regulation reforms by the Employees’ Provident Fund Organization, partial withdrawal and full withdrawal from the Employee Provident Fund (EPF) has become easier and quicker. Subscribers will now file a partial withdrawal application online from their EPF account. The retirement body modified its rules in December 2018 to enable subscribers to make withdrawal up to 75 per cent of the accumulated EPF corpus within one month after quitting a job. In case an employee is jobless for more than two months, 100 percent of the accrued corpus can be withdrawn from his/her EPF account. That being said, before withdrawing from the EPF account, there are some particulars that one needs to remember and they are:

1. In case for a period of five years, an individual does not complete the service the withdrawal from EPF corpus becomes taxable in the hands of the subscriber.
2. Once you have transferred your EPF account from a former job, the previous period of employment will then be added to the new duration of employment to determine the cumulative duration of employment for tax reasons.
3. When the actual period of service in the year of withdrawal is less than five years, the quantity withdrawn is taxable.
4. It should be remembered that the balance of the EPF account consists of four parts: the contribution of the employee, the contribution of the employer and the interest gained on both contributions.
5. In case the cumulative term of employment is less than five years, then both the employer’s contribution to the EPF and the interest earned on it are taxable in the subscriber’s income tax declaration under the heading ‘Income’
6. If withdrawal is rendered before fulfillment of five years and if you have received an exemption on that contribution under Section 80C of the Income Tax Act, the own contribution of an employee becomes taxable under the head ‘salary’.
7. In the case of a withdrawal is made before five years, the interest earned on the subscriber’s specific contribution to the EPF shall be subject to taxation under the heading ‘income from other source’
8. TDS will be levied on withdrawals at a rate of 10 percent before five years of consistent job.
9. That being said, TDS will not be withheld if the amount is less than Rs 50,000 or the company shuts down its services.
10. If your net income for that fiscal year is below the taxable income threshold, you can avoid TDS on EPF withdrawal by submitting Form 15G/15H.