If you are facing a financial crunch due to the Coronavirus Disease’s (COVID-19) economic impact, you can now dip into your employees’ provident fund (EPF) corpus to survive the crisis.
The government has notified the amendment in rules regarding withdrawal of funds from EPF accounts for COVID-19-related financial exigencies. As per the amended rules, an EPF member can withdraw an amount equal to three months of basic and dearness allowance (DA) or 75 per cent of the credit balance in the account, whichever is lower.
The EPF withdrawal math
Let us say your last drawn basic salary plus dearness allowance (DA), if received any per month is Rs 30,000 and the EPF balance in your account is Rs 3 lakh. Then the amount of money you are eligible to withdraw will be lower of:
a) Three months of basic + DA, i.e., Rs 90,000 (Rs 30,000 X 3); or
b) 75 per cent of the EPF balance , i.e., Rs 2,25,000 (75 per cent of Rs 3 lakh)
So, in this example, you are eligible to withdraw Rs 90,000 from your EPF account. The amount withdrawn by you due to the outbreak of the pandemic is ‘non-refundable’. Therefore, you are not required to refund or replenish the withdrawn amount back into your EPF account.
Taking non-refundable advance does not impact your EPF account, which remains operational and continues to earn interest.
Eligibility to apply for withdrawal
To apply for claim online, an EPF account holder should satisfy three conditions:
a) Universal Account Number (UAN) of the EPF member must be activated.
b) Aadhaar should be verified and linked with UAN.
c) Bank account of the EPF member with IFSC Code should be seeded with UAN.
As per the FAQs issued by the Employees’ Provident Fund Organisation (EPFO), no certificate or documents are to be submitted by the member or his/her employer for availing the benefit. However, an individual must keep the scanned copy of cheque ready as this will be required to be uploaded while applying for withdrawal from EPF account online.
How to apply for withdrawal
Step 1: Visit the Member e-Sewa portal: https://unifiedportal-mem.epfindia.gov.in/memberinterface/
Step 2: Login to your account by entering your UAN, password and captcha code.
Step 3: Go to Online services and select claim (Form -31, 19,10C and 10D)
Step 4: A new webpage will appear on your screen with all your details such as name, date of birth, and last four digits of your Aadhaar number. The webpage will also show your bank account details. Enter the last four digits of your bank account and click on verify. A pop-up will appear on your screen asking you to give a ‘Certificate of undertaking’.
Step 5: Once the last four digits of your bank account are verified, then click on ‘Proceed for online claim’.
Step 6: From the drop down menu, you will be required to select ‘PF advance (Form 31)’.
Step 7: You will be required to select purpose of withdrawal as ‘Outbreak of pandemic (COVID-19)’ from the drop down menu.
Step 8: Enter the amount required and upload the scanned copy of cheque and enter your address.
Step 9: A one-time password (OTP) will be sent on your mobile number registered with Aadhaar.
Step 10: Enter the OTP received by you via SMS.
Once the OTP is successfully submitted, the claim request will also be submitted. The money will be credited to your bank account only if the details match and your claim is accepted by the EPFO.
Remember that funds withdrawn from EPF account before the completion of five years of continuous service are fully taxable, as per the applicable tax slab. However, in certain conditions, such as a medical emergency or where the employee or the employer wind up their business or for any other reason beyond the control of the employer, the same is exempt from tax even if the withdrawal is made before five years of continuous employment.