The EPFO, during its 238th meeting, has made a landmark decision that will simplify the process of withdrawing money for employees. The changes introduced are massive since they combine a difficult to understand set of rules containing 13 different conditions for withdrawal into three broad categories: Essential Needs (illness, education, marriage), Housing Needs, and Special Circumstances. One of the revolutionary changes: members now have the right to take out the entire amount that they are authorized to (which comprises both the contributions of the employee and employer) as per the new system.
Who Can Withdraw & When
The new rules are as follows:
- The minimum service period for most partial withdrawals is now 12 months instead of the previously varied longer durations.
- Full withdrawal (where applicable) is allowed but now there is a rule that requires at least 25 % of the total corpus to be left in the account—this practice is to maintain a retirement cushion.
- Moreover, in the case of special circumstances (like emergencies), the requirement of providing detailed justification is eliminated: members can apply without disclosing a reason.
How To Withdraw Online — Streamlined Digital Process
Members can now apply online through the UAN portal:
- Log in using UAN and password.
- Make sure KYC (Aadhaar, PAN, bank account) is verified.
- Click on “Online Services” → “Claim”, and choose the appropriate form (partial/full withdrawal).
- Send and sign electronically—claims under the new rules might be processed much quicker with little paperwork involved.
Points To Note & Taxation Implications
- Allowing withdrawal of the entire eligible balance is a big change however the 25 % minimum retention rule means that you will essentially withdraw only up to 75 %.
- The tax rules have not been altered: withdrawal of funds after 5 years of continuous service are tax-free; early withdrawal may be subject to TDS and tax liability.
- As the rules now encompass wide categories and not so many restrictions, they are particularly suitable for the needs of members who require funds for education, housing or emergencies—nevertheless, those who want full corpus access because of unemployment may still have to deal with waiting periods or conditions.
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