The EPFO (Employees’ Provident Fund Organization) is constantly working on easing the whole process of withdrawing Provident funds for its employees. As per the fund norms, 12 percent of employee’s total salary is added to their provident fund with a matching contribution by the company. Usually, you can withdraw this PF money after two months of your cessation. Provident Fund is a retirement plan, which grants money in the form of monthly pensions. Here are few rules which have been set by the government to help employees get their rights and benefits regarding Provident Funds.
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1. In order to encourage more people in long term savings and stability, the government has a few tax laws. If an employee makes PF withdrawal after continuous employment of five years, he/she is rewarded with no tax liability. If someone switches jobs, and their PF is transfered with the new employer, it will be considered as continuous employment.
2. In case of any miscellaneous reason of employee termination, like illness or resignation, his/her withdrawal will not attract any form of tax, irrespective of their time in the company.
3. In case of an early withdrawal before 5 years, the employee is expected to pay a certain amount of tax, depending on their contribution and interest earned from the PF.
4. If an employee claims Section 80C on their PF contribution, it is taxed in the form of salary in their accounts. And the interest earned from the investment will be added to ‘income from other sources’, which will be taxed depending on their respective taxation slabs.
5. No Tax Deducted At Source or TDS is added to your Provident fund, if an employee makes a withdrawal after the completion of five years of continuous employment. In case of an early withdrawal, it attracts 30% tax in case no PAN card details are submitted with EPFO. You can save on this by simply submitting your details with a 15G/15H form, which is a validation for income below taxable limit, to prevent paying TDS. In case, either a PAN, or form is submitted without the other, the employee has to pay 10% of TDS.
6. Provident Funds are accounted in National Pension System (NPS) account, which offers Tax free services, under the Development Authority (PFRDA) and Pension Fund Regulatory, as of March 6. The amount transferred from Provident Funds to National Pension System account is not seen as income for the current year, resulting in free taxation. It is treated as future pension fund.
7. In order to claim the fund, Employee’s Provident Fund Organization has curated a single page form, which is required for money withdrawal of PF or Pension and other facilities.
8. EPFO, holders can directly submit this form straight to the retirement fund office, without attestation from their employer, till the employee’s Aadhaar and other bank details are seeded on the account.
9. For subscribers, the required documents are, bank account and Aadhaar card, a new clause is introduced, which allows you to take the claim with employer’s attestation on the submission form.
10. No other documentation or form it required for making PF claims. A provident fund, allows you to make partial withdrawal claims, determining on employee’s fund corpus, which can include purposes like construction, property purchase, marriage/education etc.
Provident Funds not only encourages long term investments, but also help in providing a sense of security and stability to employees, which motivates them to work with a peace of mind. The pension scheme, promises a regular pension to the registered employees after their retirement, which will be continued even after their death to their family, till the cover period gets over.
1. In order to encourage more people in long term savings and stability, the government has a few tax laws. If an employee makes PF withdrawal after continuous employment of five years, he/she is rewarded with no tax liability. If someone switches jobs, and their PF is transfered with the new employer, it will be considered as continuous employment.
2. In case of any miscellaneous reason of employee termination, like illness or resignation, his/her withdrawal will not attract any form of tax, irrespective of their time in the company.
3. In case of an early withdrawal before 5 years, the employee is expected to pay a certain amount of tax, depending on their contribution and interest earned from the PF.
4. If an employee claims Section 80C on their PF contribution, it is taxed in the form of salary in their accounts. And the interest earned from the investment will be added to ‘income from other sources’, which will be taxed depending on their respective taxation slabs.
5. No Tax Deducted At Source or TDS is added to your Provident fund, if an employee makes a withdrawal after the completion of five years of continuous employment. In case of an early withdrawal, it attracts 30% tax in case no PAN card details are submitted with EPFO. You can save on this by simply submitting your details with a 15G/15H form, which is a validation for income below taxable limit, to prevent paying TDS. In case, either a PAN, or form is submitted without the other, the employee has to pay 10% of TDS.
6. Provident Funds are accounted in National Pension System (NPS) account, which offers Tax free services, under the Development Authority (PFRDA) and Pension Fund Regulatory, as of March 6. The amount transferred from Provident Funds to National Pension System account is not seen as income for the current year, resulting in free taxation. It is treated as future pension fund.
7. In order to claim the fund, Employee’s Provident Fund Organization has curated a single page form, which is required for money withdrawal of PF or Pension and other facilities.
8. EPFO, holders can directly submit this form straight to the retirement fund office, without attestation from their employer, till the employee’s Aadhaar and other bank details are seeded on the account.
9. For subscribers, the required documents are, bank account and Aadhaar card, a new clause is introduced, which allows you to take the claim with employer’s attestation on the submission form.
10. No other documentation or form it required for making PF claims. A provident fund, allows you to make partial withdrawal claims, determining on employee’s fund corpus, which can include purposes like construction, property purchase, marriage/education etc.
Provident Funds not only encourages long term investments, but also help in providing a sense of security and stability to employees, which motivates them to work with a peace of mind. The pension scheme, promises a regular pension to the registered employees after their retirement, which will be continued even after their death to their family, till the cover period gets over.
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