Investors are recommended not to make withdrawals from their Employees’ Provident Fund (EPF) till maturity as it operates on compounding and the corpus if permitted to make up, can reap big positive aspects. Usually, partial withdrawals or advances from PF are permitted but only below specific circumstances.
Experts say EPF is a sort of investment scheme that is made for retirement, therefore, withdrawals ought to be prevented unless it is an absolute emergency. Also, note that provident fund that is withdrawn inside 5 years of account opening is taxable
To meet brief-term requires, partial early withdrawal from EPF is permitted on specific circumstances but to withdraw the complete corpus, the subscriber have to be at least 58-year old. Also, one can withdraw up to 90 per cent of one’s corpus, at the age of 54 years, 1 year ahead of retirement. After leaving a job, one can withdraw 75 per cent of their provident fund balance if he/she remains unemployed for 1 month and the remaining 25 per cent soon after the 2nd month of unemployment.
Partial withdrawals are permitted for monetary objectives like wedding preparing, education, residence building, and health-related situation. Note that the interest earned and withdrawals are not taxed.
When can you make a premature withdrawal from your EPF account?
Medical Emergency
In any case of health-related emergency be it for the investor, spouse, parents or children, any PF member can make a pre-mature withdrawal. Either six occasions the investor’s month-to-month salary or a lesser one of the employee’s share plus interest.
New House
In case of building or buy of a new residence, one can make a partial withdrawal from their EPF, even so, the employee have to have served a minimum of 5 years. In this case, one can withdraw 90 per cent of the PF Balance.
Renovation of House
The employee can withdraw soon after 5 years from the building of a residence, for renovation from their PF dollars. 12 occasions the employee’s month-to-month salary can be withdrawn in this case.
Home Loan
For repayment of a home loan, one can make withdrawals from EPF but the employee have to have served a minimum of 3 years. They can make a withdrawal of 90 per cent of the PF Balance for this circumstance.
Wedding
For the wedding goal, be it the member or sibling or of children, one can make a partial withdrawal from PF. However, the employee have to have served a minimum of 7 years. 50 per cent of the employee’s share along with interest can be withdrawn for this case.