The government provides the facility of opening Provident Fund (PF) accounts for employed individuals, where 12% of the employee's salary is deposited monthly, and the employer contributes the same amount. Interest is earned on this sum, creating a significant savings fund for employees. However, there are rules governing withdrawals from PF accounts.
Covid-19 Advance Fund Facility:
During the Covid-19 pandemic, the government provided the Covid Advance Fund facility, allowing EPFO members to withdraw money from their PF accounts to overcome economic challenges caused by the pandemic. This facility was available until december 2023.
Withdrawal before 5 Years:
If an individual withdraws money from the PF account before completing five years of service with a company, a 20% Tax Deducted at Source (TDS) will be applied. However, if the withdrawal amount is less than Rs 50,000, no TDS will be deducted.
TDS Exemption after 5 Years:
No TDS is charged on PF withdrawals if the withdrawal is made after completing five years of employment with the same employer.
Tax Exemption under Section 80C:
Tax exemption can be claimed under Section 80C of the Income Tax Act. If withdrawals are made before five years of employment, TDS is deducted, but withdrawals after completing five years are tax-exempt.
Limit on Advance Withdrawals:
EPF members should note that they cannot make advance withdrawals more than three times for marriage and education purposes. To be eligible, the EPF member should have at least seven years of membership under the Provident Fund.
