Provident Fund Withdrawal

A Provident Fund provides a financial security to the salaried employees after the retirement. The provident fund is a small part of the employee’s salary which is deducted and added to the provident fund every month. Here the employer also contributes the same amount to the employee’s PF account. This PF amount can be withdrawn once the employee has left the company. The Government employees get a lump sum amount after their retirement. In short, the Provident Fund is a small saving scheme option which can be beneficial after the retirement.

In India, there are three types of Provident funds in India. They are the following:

1. The Public Provident Fund for Public (PPF)
2. Employee’s Provident Fund (EPF) for the private sector employees.
3. General Provident Fund for the Government Employees.

The validity of a Provident Fund is 15 years and after that, if you wish to make any withdrawals then you need to undergo strict rules and regulations. The holders cannot withdraw any amount for the first six years. After that, you can withdraw 50% of the available balance. The holders cannot withdraw the complete amount before the end of the tenure. Once the 15 years of tenure is completed, the PF can be extended for another 5 years and going forward the account can be closed or rolled over.

If an individual has a GPF or an EPF account then the withdrawals are not allowed until and unless the employee has quit or is self-employed. According to the EPF regulations, the money can be withdrawn only if the holder does not have a job while making the withdrawal. The PF transfers are allowed if the holder switches the job. If an employee wants to make a withdrawal after leaving a job, then he/she has to submit a declaration form along with mentioning the reason for making a withdrawal.

Partial withdrawals are also allowed but in some special cases such as while taking a loan. The loan can be for any purpose like while purchasing a house, education, marriage, medical treatments etc. The Partial withdrawals are possible if the employee has completed 7 years of service and the sum which is to be withdrawn must not be more than 50% of the contribution amount. These types of withdrawals can be done only three times during the employee’s service period. If the withdrawal of the amount is done for the marriage or education purpose then an adequate proof has to be shown. The withdrawals can be done for the medical treatments, with the maximum amount allowed is six times the individual’s basic salary.

How to Submit PF Withdrawal Claim Online

The Employees Provident Fund Organization (EPFO) has launched an online facility to submit the Provident Fund withdrawal claims. This new measure has served over 4 crores EPFO members and thus helped in reducing the processing time for PF Claims. Now the subscribers do not have to wait for their turn to approach their employer for the PF Claims.

The EPFO has set some guidelines to initiate the PF Claims Withdrawal Form Online:

• The EPFO subscribers must have an activated UAN (Universal Account Number) and their EPF account must be seeded with the Aadhaar. This will help to submit online claims for final settlement, pension withdrawal benefit or partial withdrawal of PF. The PAN details must also be seeded with the EPFO Database if their service is lower than five years.
• The subscribers must sign in at EPF’s member interface with their UAN credentials.
• They can select the claim they want to get settled and can authenticate the same with the help of an OTP (one time password) which will be received in their registered mobile number with Aadhaar to complete the claim submission.
• Once, the claim has been submitted it then goes to the EPFO Database where it is processed and the sum is credited to the subscriber’s bank account.

Provident Fund Withdrawals can be made for the following purposes

For purchasing a dwelling house or a flat / Construction of a house and purchase of a site for the same

• The PF withdrawals can be done by purchasing a house or a flat where the account’s family member can reside. If the account holder wants to get a house constructed in the site brought from the State Government, Co-operative society, Trust, Institution, Local body or Housing Finance Corporation, then withdrawals can be done.
• The withdrawals can be done by purchasing a site for the construction or for buying a built-in house from any individual or from any promoter.
• The PF withdrawals can be done for constructing a house on a vacant site owned by the spouse or the account holder or for completing the construction of the house.

The money withdrawn for constructing house should not be more than the holder’s basic salary and dearness allowance for a period of 24 months. If the withdrawals are done for purchasing the ready to occupy flats then the money was withdrawn should not be more than the basic holder’s salary and the dearness allowance for a period of thirty-six months. The withdrawals can be done if the holder’s account is more than five years old, the member’s contribution is Rs 1000 and the declaration is got from the holder saying that the property is being purchased is free of encumbrances and is in the name of the holder or the spouse. The withdrawals cannot be done for buying a share from a joint property except with spouse.

When a withdrawal is granted for purchasing a house, then the payment is not paid to the holder but to the agency in multiple installments. If the withdrawal is granted for the purchasing a dwelling flat from a promoter then the money is paid to the holder in multiple installments.

Requirement for Different Cases while purchasing Dwelling House / Flat

1. For Purchase of the House Construction:

Requirement:

• The PF account must be five years old with a minimum balance of Rs 1000.
• Form 31 must be submitted for making the withdrawals.

Documents Required:

• A Declaration from the account holder stating that the new property is free from the debt and is registered in his/her name or spouse’s name.

2. For House Construction:

Requirement:

• The PF account must be five years old with a minimum balance of Rs 1000.
• Form 31 must be submitted for making the withdrawals.

Documents Required:

• A Declaration from the account holder stating that the new property is free from the debt and is registered in his/her name or spouse’s name.

3. Purchase of the Flats:

Requirement:

• The PF account must be five years old with a minimum balance of Rs 1000.
• Form 31 must be submitted for making the withdrawals.

Documents Required:

• A Declaration from the account holder stating that the new property is free from the debt and is registered in his/her name or spouse’s name.

4. For Renovation/ Improvement of the Houses:

Requirement:

• Five Years after the house has been constructed.
• Form 31 must be submitted for making the withdrawals.

For the Repayment of the Loans (on a case by case basis)

The withdrawals can be sanctioned for partial withdrawals or complete repayment of the loans. These loans can be taken from the nationalized banks, State Government, State Housing Board, registered co-operative housing society or Municipal Corporation. The loan that is availed should be in the name of the account holder or his/her spouse. The amount that is withdrawn should not exceed a sum equal to thirty-six months basic salary and dearness allowance or the total contributions made by the employee or the employer. Once, the withdrawal request has been made, the payment is made directly to the lender, not to the account holder.

For the advances taken for the loan payments

Requirement:

• The PF account should be ten years old. The loan should be availed from a Government Institution.
• Form 31 is submitted for making the withdrawals.

Documents Required:

• The account holder has to provide a certificate to the lender with complete loan details, outstanding amount and repayments.

For purchasing a dwelling house or flat / construction of a house inclusive of a site owned by the account holder

The Provident Fund account must be five years old and the minimum balance in the account must be Rs 20, 000. The amount is sent directly to the Government agency or to the Housing Agency in multiple installments.

Granting Withdrawals for special cases

An advance for an amount not exceeding the employee’s contribution can be granted if the account holder remains without an employment for a period of more than fifteen days when the work units or the factories have been closed down. If an employee does not receive any wage for more than two months for cases such as the strikes. If the factories are closed for more than six months then another advance can be granted for up to 100% of the total contribution done by the employer along with the interest. The advances that are provided will be interest-free and will be recovered in monthly installments.

Withdrawals for Illness and Hospitalization

For hospitalization for one month or for more than one month, a non-refundable advance is given.  This can be major surgeries, diseases or other heart ailments. This advance is given if the employer states that the employer does not get any Employee’s State Insurance Scheme benefits. The advance amount that is granted should not be more than six months dearness allowance and basic salary or the employees’ contribution amount, whichever is lesser.

Advances took for Illness and Hospitalization

Requirements:

• The hospitalization must be for one month or more.
• For 31 must be submitted to make the withdrawals.

Documents that are required:

• The doctor has to give a certificate of the surgery or hospitalization.

Advances in Education or Marriages of Children/ Siblings/ Self

A non-refundable advance is made to the account holder’s children or sibling marriage or for education purpose. The amount that is sanctioned should not be more than 50% of the employee’s contribution. The employee cannot take more than three advance amounts for these purposes.

Requirement:

• The PF account must be seven years old with a minimum balance of Rs 1000.
• Form 31 is submitted for making the withdrawals.

Documents Required:

• The account holder has to submit a declaration of the employer’s attestation.

Advances Applicable to Abnormal Conditions

Here the advances are granted if the person’s property has been damaged by natural calamities such as floods, earthquakes etc. The advance amount that is given is Rs 5000 or 50% of the employee’s contribution amount along with the interest whichever is less. The advances will not be sanctioned if the states declare that the calamity has affected the public areas. The certificates are got by the holder from unauthorized sources or the application is made within four months of the declaration date.

Requirement:

• Certificate from the correct authorities verifying the damage.
• Declaration to the State Government.
• Form 31 is to be submitted for making withdrawals.

Documents Required:

• Certificate from the recognized university.

Advances are given to the Persons that are affected by the Electric Cuts

If the electricity has been cut it the worksite area where the employee is working then a non-refundable amount of advance is given. The advance is granted if the wages of a month is starting from January 1973 and has been less than 3/4th or equal to 3/4th. The amount which is to be sanctioned is Rs 300 or the wage amount or the employee’s total contribution amount. The State Government will not provide any advance if the electricity has been restored and the employer will give a certificate stating that the pay drop was due to the electricity cut.

Requirement:

• The advance is granted if the wages of a month is starting from January 1973 and has been less than 3/4th or equal to 3/4th.
• Form 31 will be submitted for making the withdrawals.

Documents Required:

• State Government’s certificate stating the electricity cut.

Advances Provided to the Physically-Handicapped Persons

If an account holder is physically handicapped, then he/she can get an advance to purchase any equipment to aid him in the regular activities. The advance will be given to the account holder only if the account holder holds a medical certificate from the doctor stating that he/she is physically handicapped. The amount that is sanctioned should not be more than six months basic salary and the dearness allowance or the employee’s total contribution amount. The next advance will not be given within three years of availing the first advance amount. In this case, Form 31 is submitted to make the withdrawals along with the doctor’s certificate.

Withdrawals Done a Year before Retirement

Here the account holders can withdraw up to 90% of the accrued amount after he/she reaches the age of 54 or before a year of the retirement from the company.

Withdrawals at the age of 55 for Investing in Varishtha Pension Bima Yojana

The Provident Field account holders can withdraw up to 90% of the contribution amount after he/she reaches the age of 55 to invest in the Varishtha Pension Bima Yojana which is offered by the Life Insurance Corporation of India.

Payments of Advances and Withdrawals

The payments for any advance or withdrawals are made by the account holders through the postal money orders as the deposits in the member’s bank accounts or the post office accounts or through the concerned employer.

When are the Funds Payable to the PF Account Holder?

A Provident Fund Member can withdraw the complete amount from his/her under the following circumstances:

• After getting retired from the current company, when he/she turns the age 55.
• If the account holder retires due to permanent mental issues as certified by the doctor.
• If the account holder migrates to another country permanently, or taking an employment outside India.
• If the service has been terminated due the mass/individual retrenchment.
• In cases, where the persons are transferred by an employer from one establishment to another, discharged and given retrenchment compensation or is suffering from a severe illness.
• On the death of the account holder, the amount is payable to the nominee. If there are no nominees then the amount will be distributed in equal shares to his/her family members.

Making PF Withdrawals Online

The PF cardholders can use their Aadhaar cards to make the PF withdrawals online. The EPFO has launched an online facility to make the PF withdrawals. This feature was introduced in March 2016. Using this online platform will reduce the time. The settlements can be done within few hours. Any of the customers who want to enjoy the PF withdrawal facility can link his/her Aadhaar card, Bank Account and Universal Account Numbers (UANs).

The Old Procedure to Withdraw the Provident Fund:

1. Download the Form 19C and Form 10C.
2. Fill in the form with required details along with a blank cheque.
3. If you are going to the employer, then submit the above-mentioned documents to the employer.
4. If the withdrawal process is not through the employer, then there is an alternative method to get it done. It is to get the attestation done by the Bank Manager.
5. The complete attested forms are sent to the regional PF Office for further approvals.

The Regional Office takes a duration of one month to process the withdrawal application. The EPFO will credit the pf amount directly to the applicant’s bank account.