In our earlier post Basics of Employee Provident Fund: EPF, EPS, EDLIS we had talked about What is Employee Provident Fund(EPF), How is it Calculated, What is Employee Pension Scheme(EPS), Employees Deposit Linked Insurance Scheme (EDLIS), what are the EPF interest rate, how much would one save in EPF, about the annual statement sent my EPF office and how one can find it out online. This post will focus on how to withdraw, transfer EPF account.
From 10 Feb 2016 retirement age has been changed to 58 years. Our article Changes in EPF Withdrawal Rules from 10 Feb 2016 discusses it in detail.
You can withdraw from EPF while in service. Our article EPF Partial Withdrawal or Advance discusses EPF withdrawal while in service.
Table of Contents
Withdrawal from EPF,EPS
Q: At the time of change of Job what happens to EPF? Can one withdraw the entire amount?
A: Yes, legally it is mandatory to transfer EPF Account at the time of job change. But, people generally don’t do it; instead of transferring, they withdraw the amount.
In case of EPS, if the service period is less than 10 years, you’ve option to either withdraw your corpus or get it transferred by obtaining a ‘Scheme Certificate’. Once, the service period crosses 10 years, the withdrawal option ceases.
Q: Are there in any tax implications, if I withdraw the EPF balance at the time of a Job change?
A: In case you are a member of recognized provident fund it depends on if contribution is over 5 years or not, including transfers from different companies. For ex: an employee who has worked with X company for say 3 years, then he resigned from that organisation and joined Y company, wherein he worked for 2 years, then resigned from there to join establishment for 2 years but during these 7 years of service he has not withdrawn but transferred his Employee provident fund, then we say continuous service of 7 years.
If you withdraw before completing a period of 5 years, then all your previous years income gets recomputed as if the fund was unrecognized from the very beginning (i.e., the tax benefits you received on your own contribution u/s 80C/88 in earlier years will get forfeited) and further the employer contribution and interest received will be added to your current income subject to relief under section 89. In other words Payment received by the individual in respect of the employer’s contribution along with the interest accrual thereon is taxed as “salary”. Interest on the employee’s contribution is taxable as “other income”. Payment received in respect of the employee’s own contribution is exempt from tax (to the extent not claimed as a deduction earlier).
I-T provisions provide that the trustees of a recognised PF or any person authorised by the regulations of the fund to make the payment of the accumulated balance to the employee should deduct tax at source(TDS) while paying the amount. Further, the person liable to deduct tax has to issue the certificate of tax deducted at source (Form 16) within the specified time frame to the employee depicting the details of taxes withheld from the accumulated PF balance and also comply with other salary-related compliance necessities. Ref:Taxguru.in: Withdrawal from Provident Fund (PF) Account before Completion of Five years taxable?(Mar 2012)
So the next time you think of withdrawing your PF, you must as an individual also assess whether the same is taxable or exempt. More such queries are also on onemint:Tax on Provident Fund Withdrawal(Mar 2011) or Taxguru.in: Withdrawal from Provident Fund (PF) Account before Completion of Five years taxable?(Mar 2012)
Tax on Provident Fund withdrawal before 5 years from Jun 2015
- TDS to be deducted by at the rate of 10% from the withdrawn amount.
- TDS will not be deducted if the withdrawal is less than 50,000. (Before Apr 2016 the limit was Rs.30,000).
- Also, if the person gives declaration that he do not have any taxable income by filing Form 15G or Form 15 H, then also no Tax will be deducted.
- In case the PAN is not provided to the Provident Fund authorities than tax will be imposed at the maximum marginal rate which means tax rate applicable to highest slab tax payers, around 35 percent.
- Tax on Provident Fund withdrawal after 5 years of continuous service remains intact and no tax will be levied on the withdrawn amount.
Q. How can you withdraw the EPF?
Employee can withdraw from EPF by filling Form 19(pdf) which is available with the HR department of his ex-employer or can download it from EPFI webpage of download forms. One can withdraw only after a waiting period of two months after resigning. The rules are that an employee should not be in employment for two months after resigning if he has to withdraw his P.F amount. Form is submitted to the regional provident fund Commissioner office after which the employee receives his amount along with interest within a period of 90 days.
Q. Are Withdrawl of EPF and EPS related?(Ref:Citehr:2007)
No Eps and EPF are not linked . You can withdraw the PF once you leave the organization after filling Form 19. In case of EPS, if the service period is less than 10 years, you’ve option to either withdraw your corpus or get it transferred by obtaining a ‘Scheme Certificate’. Once, the service period crosses 10 years, the withdrawal option ceases .For pension, withdarwal benefit, scheme certificate etc. application should be through ex-employer. For pension, Form10D (pdf format) is to be used, Instructions to fill Form 10D. For withdrawal benefit & scheme certificate download Form 10C(pdf format) or one can download it from EPFI webpage of download forms. Instructions to fill Form 10C
Q.Is it possible to commute pension fully or partly under EPS?
A: Commutation of Pension means payment of lump sum amount in lieu of a portion of pension surrendered voluntarily by the pensioner based on a duration of period in relation to the age. Earlier there was a provision under EPS allowing commuting of one third of monthly pension by paying 100 times the original monthly pension. However, the amended scheme w.e.f 26 Sep’ 2008 doesn’t allow it anymore. But if interested in knowing about Commutation of Pension Government of Tamil Nadu Directorate of Pension webpage can be read.
Articles that might be helpful: Hub:How to withdraw your provident fund or PF in India?(2010)
Q: How do I know the status of my withdrawal application?
A: Visit webpage Claim Status on epfindia.com. Select the EPFO Office where your account was maintained and furnish your PF Account number. Document Know Your Claim Status (pdf format) lists the steps in detail with images at each step. Please be aware of the tax implications of withdrawal.
Transfer of EPF account
How to transfer EPF?
Ideally, you should initiate the process of transferring your EPF balance as soon as you join your new organization and are allotted a new PF account number, which is an alphanumeric number. Quoting from earlier post Basics of Employee Provident Fund: EPF, EPS, EDLIS PF format is :
EPFO Office Code/Establishment Code(Max. 7 Digits)/Extension(Max. 3 digits)/Employee Account Number (Max 7 digit)(Earlier it was EPFO Office Code(first two letters ), Employer’s/Company code( 5 digits)/ Employee’s Account Number . In this case you can search the new Code at EPFI Establishment Information Search This is also available on 1st step mentioned above: Member Balance Information Search Your Establishment Code here..)
From Oct 2014 most of employees have been alloted Universal account number or UAN , a 12-digit number by the Employee Provident Fund Organization(EPFO) which gives him control of his EPF account and minimises the role of employer. Earlier one only had a Provident Fund (PF) account number which was associated with the employer. Change of job meant another Provident Fund number. It involved transferring from one account number to another. Our article UAN or Universal Account Number and Registration of UAN explains it in detail.
Transfer of EPF Online
In the EPF books of account, entry is under the name of employer. When ones take up a new job in the interim, he assume a new identity for the EPF office. Earlier A resigned employee who joins another company is left with an option of transferring the his previous PF account to the current PF account, by filling the Form 13(pdf) . Now with UAN number one can link various EPF accounts.
Universal Account Number (UAN) Member Portal (www.uanmembers.epfoservices.in) was launched in September 2014. This portal offers lot of facilities to employees or EPF members. But, EPF Online Transfer Claim is still not available. For time-being you have to submit online EPF Transfer claims through http://epfindia.com/Employee_OTCP.html or Click on Online Transfer Claim link ar EPF website http://memberclaims.epfoservices.in/ . Online Transfer Claim Portal (OTCP), was launched on Oct 2 2013,to ensure timely transfer of EPF account from one employer to another when an employee changes job. Our article Transfer EPF account online : OTCP explains it in detail.
Transfer of EPF Through Form 13
- When an employee joins a new company and he wishes to transfer his previous company provident fund amount, he should inform the HR department or Accounts department of the new company.
- The employer will issue Form 13, in which the member has to fill the details of the previous company like – name, address, provident fund account number and address of the provident fund office where the account was held.
- On Form 13, the signature of the previous employer is not required.
- Once he fills the required details and submits it to the current employer, the current employer will forward it to the provident fund office for the transferring process. The new regional PF office then gets in touch with your previous regional PF office to effect the transfer.
- The time taken for transferring the fund from one account to other account normally takes about 30-40 days from date of submission.
The process is same even if you want to transfer your old PF account in the middle of your new job. epfindia.com Form 13 (pdf format)
What are Problems Faced in withdrawing /transferring EPF/EPS and the remedies when withdrawn using Form 13.
On many occasions, members face problems in withdrawing the provident fund monies. Some of the normal reasons for the problems and the solutions to overcome these are quoted here below:
Mismatch of Signature of the employer: Employer should inform the PF office through a formal letter authorizing the signature of the concerned authority. If the PF officer is still not convinced with this letter, a fresh application has to be submitted again.
Mismatch of Signature of the member :If the signature mismatches or they have changed their signature, they need to inform the provident fund office through their employer. If the PF officer is still not convinced with this letter, a fresh application has to be submitted again.
Mismatch of Provident Fund Account number of the member: If the PF Account number has been mentioned wrongly by the member, then the application will be returned back to the employer. The employee has to correct the details and get it counter-signed by the employer.If the PF Account number has been reported wrongly by the employer in their annual return, then it needs be corrected through a formal letter to the PF department explaining the problem and correcting the same.
Incorrect bank account details furnished by the member: The correct details with regard to account number, name of the bank, branch address, MICR code of the bank (MICR is a 9 digit number printed on the cheque leaf, next to the cheque number) have to be filled in again and re-submission required.
Incorrect address given by member: The correct details have to be filled in again and re-submission required.
Mismatch of date of joining / resignation: If the date of joining / resignation has been mentioned wrongly by the member, then the application will be returned back to the employer. The employee has to correct the details and get it counter-signed by the employer.
Communication from PF department while processing the request would not have reached the employer :The employer / employee needs to check with the PF office and find out the reason for not receiving the communication. If not traceable, then a request has to be made to the PF office for re-sending the communication.
Failure of employer to remit the PF amount recovered from members to PF Account: It is the duty of the employer to remit the PF monies (which are recovered from employees) to the authorised banks for the credit of PF department. It is a statutory violation if the recovered monies are not remitted on time.
If the employee comes to know that the employer has not remitted the PF monies that are recovered from him, then he can lodge a complaint to the PF office against the employer insisting for the recovery.
Member might have changed his / her official name and the same has not been informed to the provident fund office: If the employee has changed his / her name and the same has not been informed to the PF office, then the application will be rejected when the PF office compares the data with the returns being filed by the company. In such a situation, the concerned employee has to request through a formal letter informing about the change in name and also, attach the notification copy of the Gazette publication.
Change in Authorised Signatory of the employer when the application is in process: Sometimes, the authorized signatory would have been changed when the application is in process and it would lead to rejection of the application. In such a situation, the employer has to get the application re-signed by the concerned authorized signatory who is active at the appropriate period of time.
What if EPF is not transferred?(Ref:Livemint May 2010:Employee provident fund is for keeps, don’t withdraw it midway)
The good news is that even if you don’t transfer your previous balance, your previous accounts are live and accessible. You can withdraw or transfer the balance to your current PF account.
However, remembering your employer and your EPF number may not be easy. So, keep all EPF slips. “After a considerable waiting period, EPFO (Employees’ Provident Fund Organisation) will transfer funds to an unclaimed deposit account. Your funds will not earn interest during that period but once you make a claim, the interest due is paid even for the period your fund was sitting in the unclaimed deposit account. But, according to procedure, to withdraw your money is quite cumbersome. A better strategy is to remember to transfer your account at the time of changing jobs.
A must read article Transfer of EPF Provident account Balance by Anup Mukherjee is about getting his wife Madhu’s EPF account transferred(2011) . Some great information
EPF withdrawal or Transfer Issue ?
Jagoinvestor article on RTI for EPF Withdrawl and Transfer issue (Mar 2012) talks about how one can file a RTI(Right to Information) if one is unclear about what your EPF status is or if one’s EPF transfer work has even started? Why did one’s EPF money still not credited in bank account etc etc… You can ask all these questions and you should be getting the 100% right and clear answers within 30 days. The only point here is that you should be doing it the RIGHT way. The three steps to file are:
- Buying a Postal Order of Rs 10 from Post Office
- Drafting your RTI letter
- Sending the RTI letter by Registered Post or Speed Post
The article has details on each of the step, with sample letter ,filing RTI online, filing two RTI applications for Transfer of EPF. Note Before filing the RTI , a good idea would be to file a
Should one withdraw or transfer EPF account?
With employer matching one’s contribution and a tax-free guaranteed return of 8.5%,EPS is attractive. If one contribute 12% of his basic plus dearness allowance every month (assuming you are 25 and earn Rs20,000 per month) to your EPF account and your employer matches the sum, by the time you retire, you would be able to save Rs1.38 crore, assuming the interest rate remains at 8.5% and you get a modest hike of 5% a year in your salary. As it is cut from salary before it is credited to our account, it becomes forced savings. We recommend you to transfer EPF account and not withdraw.Let Compounding, eighth wonder of world do it’s magic.
- Basics of Employee Provident Fund: EPF, EPS, EDLIS
- Understanding Employee Pension Scheme or EPS
- UAN or Universal Account Number and Registration of UAN
- Transfer EPF account online : OTCP
In this article we have tried to explain the process of withdrawing or transferring Employee Provident Fund(EPF), Employee Pension Scheme(EPS). We hope it was helpful. If there is an error, mistake, some information is missing please let us know. Did you withdraw or transfer your EPF account? Please share your experience, it will benefit others.