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When can money be withdrawn from a provident fund?

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Employee provident funds, or EPFs, have historically been the most popular way for paid Indians to save for retirement. How about a provident fund, though?


An employee retirement savings plan administered by the government is known as an employees' provident fund.


Employees make a monthly contribution to their provident fund from a portion of their pay. At the time of retirement from employment, lump sum payments plus interest are the desired outcome.


The Employees' Provident Fund Organisation, or EPFO, is in charge of managing and regulating provident funds in India.


Now, who is eligible for provident fund?


According to the law, every employee with a monthly wage of up to Rs 15,000 qualifies. However, the majority of Indian businesses include it in their compensation packages for all employees. If your employer allows it, you might choose not to participate in it in the beginning of your career if your pay is higher. If you choose EPF, you are unable to change your mind about it while working there.


Let's now discuss the input.


At the conclusion of each month, the statutory contribution of 12% of the employee's base pay is credited to their account. The employer often makes a matching contribution. The provident fund component receives 3.7% of the latter payment, and the pension fund receives the remaining 8.33%.


Your employer sets up your PF account. You can use a Universal Account Number, or UAN, to manage it online. While moving jobs, you can transfer your account and check the balance. The major purposes of the UAN offered by EPFO are to monitor PF balance and PF claim status.


The government sets the interest rate that is frequently paid on the combined funds. The EPFO decreased the interest rate on the employees' provident fund in March 2020 from 8.65% to 8.50% year 2019–20. The interest rate was kept at 8.50% for the fiscal year 2020–21.


Your provident fund may be withdrawn in one of two ways.


The first is when you turn 58 years old and begin to retire. By doing this, you can request a withdrawal of your provident fund from your employer and receive the full corpus. Additionally, after deducting taxes, you may ask for and withdraw your entire PF corpus if you have been unemployed for two months or longer.


Another option is to take a portion of your corpus before retiring in the event of significant life events like your marriage or the marriage of your child, as well as for education, the purchase of a home, or medical emergencies. In each of these scenarios, there is a different portion of the corpus that you are permitted to withdraw. The EPFO website has more information about these.


In her Union Budget for 2021–22, Finance Minister Nirmala Sitharaman stated that interest generated on employees' annual contributions to their PF that exceed Rs. 2.5 lakh would be taxed. The Central Board of Direct Taxes notified the regulations for these on August 31st, following up on this notification. When just employees—and not employers—contribute to the PF, the barrier is higher, at Rs 5 lakh.


There will be two parts to each EPF subscriber's account: taxable and non-taxable. From FY21 to FY22, interest will be calculated in a separate manner for each account. Beginning on April 1, 2022, these new regulations take effect. Therefore, contributions made up until March 31, 2021, will not be taxed.


By periodically visiting the EPFO website, you can keep yourself informed on the latest provident fund regulations on uan password create.

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