The coronavirus pandemic has caused major problems all over the world. People are dying every day due to the pandemic. With all bans of exports and no recruitment, the economy of the nation has fallen drastically. This major fall due to the economy has caused many problems in middle-class families. During such time, a family needs financial support. Hence, the government has allowed employees to withdraw money from their EPF accounts due to the pandemic. Lets read about it in detail.
It is well known that the EPF money is for future uses. The employee gets the money from the EPF account during retirement. This money helps the employee to lead a secure life after retirement. Yet, while making the rules, the EPFO has even made some exceptions. It states that a person can withdraw money from the EPF account during the time of emergencies.
Now, we know that a person cannot withdraw money from the EPF account until the age of 54. Even when an employee reaches the age of 54, he/she can only withdraw 75% of the EPF amount. But, there are exceptions to this particular rule too. If an employee is in an emergency and is in dire need of money, then he/she can withdraw money from the EPF account. Here, emergencies are medical needs, loans, buying a home, and many more. People are facing financial problems due to the pandemic. During this time, the EPF money could be of great help for the employees.
The EPF account is even stated as a backup account. It helps a person during an emergency, and this pandemic is an emergency. To help out the employees with their financial needs, the EPFO has started some new rules. According to the new rules, a person can withdraw money from the EPF account due to the pandemic. We call this money as “non-refundable” advances. It means that the employee does not have to repay or pay any kind of interest in it.
How To Withdraw From EPF Due To Corona Virus (COVID-19)?
In this article
There are some steps following which an employee can withdraw money from EPF due to coronavirus or the pandemic. Below is the step by step process which will help a person to withdraw money.
There are some steps following which an employee can withdraw money from EPF due to the pandemic.
Time needed: 10 minutes
1. Visit the e-sewa portal
The first step is to visit the e-sewa portal, which handles all the EPF withdrawal cases. https://unifiedportal-mem.epfindia.gov.in/memberinterface/
2. Log into account
After that, you have to log in to your account. For doing this, enter your UAN, password, and captcha code in the blanks.
3. Open in Online services
Once you have logged into your account, click on the “Online services” option. After that, select the claim option. Here you will see Form number 31, 19, 10C, and 10D which people use for withdrawal of money.
4. Fill details
A new page will appear on your screen. Here, you need to fill in the details like name, DOB, and the last digits of Aadhar card. After entering these details, the page will show you bank account details. Here, fill out the last 4 digits of your account number. After filling out these details, click on the “Verify” option.
5. Verify and Proceed
After the website verifies the bank details, you have to click on the option “Proceed for the online claim.”
6. Select PF Advance
A new webpage will appear with a drop-down menu. From the drop-down menu, you have to select the option, “PF advance (Form 31)”
7. Select the option “Outbreak Of Pandemic”
After selecting Form 31, you have to select the option “Outbreak Of Pandemic” from the menu. It is well known that a person can only take out money from the EPF account only in times of emergencies. So, one needs to select the type of emergency from the menu, so that they can withdraw the money.
8. Fill the money and details
After selecting the “emergency” option, a new page will appear. Now you have to write the amount of money that you need to withdraw from the account. After doing this, you have to upload the scanned copy of the cheque and then enter your address. Make sure that the details are true.
9. Receive OTP
After filling out the amount of money, an OTP will appear on the registered mobile number.
10. Click Submit
Enter the OTP on the screen and click on the “Submit” option.
How To Withdraw Money By Using Umang App For Covid-19 Relief?
Earlier, we studied How to withdraw amount from EPF due to coronavirus, Now we will read about an app which also helps in this.
EPFO even has a Umang app which the employees can use. Here all the details about EPF is present. One can even claim for withdrawal of money through this app. How to withdraw money from the Umang app for COVID-19 Relief?
Here are the steps for withdrawing money with Umang app.
Step 1: The first step here is to log in to your Umang app. https://web.umang.gov.in/web/
Step 2: After logging in, select the option “EPFO”
Step 3: Now, select the “Employee Centric Services” option. After selecting this option, a menu will appear. From the menu, select the option, “Raise Claim.”
Step 4: After selecting “Raise Claim” a new webpage appears. This webpage, you have to give your UAN details. After entering the details, select, “Get OTP” option. The OTP will help you to log in to your EPF account.
Step 5: Now, enter the OTP and login to your EPF account. After logging in to the account, verify your bank account details. For verifying bank account details, enter the last 4 digits of the account number in the blank space.
Step 6: After verifying the bank account details, select the member ID from the drop-down menu. Now, select the “Proceed for the claim” option on the page.
Step 7: On the new page, you have to give your address details. Check the address before selecting the “Next” option.
Step 8: In this new page, you have to upload the scanned copy of the cheque.
After completing all the steps, the EPFO will verify the details. As the verification is done, the EPFO will approve the application. After approval of the claim, you have to fill in the amount required. The EPFO will credit this amount immediately in your bank account. If the bank account details are not correct, the EPFO will not credit the amount.
Who Can Apply For Withdrawal Under COVID-19 Relief Scheme?
Everyone is not eligible for this withdrawal under the COVID-19 relief scheme. Why? The answer to this question is in the next section. But, who is eligible for withdrawing the money from the EPF account during the time of pandemic?
The employees who fulfils the eligibility criteria stated below can withdraw money.
- The Universal Account Number or UAN of the EPF account holder should be active.
- The Aadhar card of the employee should be linked with UAN.
- The employer should link the correct IFSC code of his/her bank account with UAN.
- The EPF account should be KYC-compliant.
- The mobile number registered with the Aadhar card should be active.
If an employee fulfills all the requirements then he/she can apply for withdrawal for COVID-19.
How Much Money Can Be Withdrawn From EPF Account Under COVID-19 Relief?
The Government has made some rules for withdrawing money. One such rule is that the employee cannot withdraw the entire EPF amount. There is a certain amount of money that the person can withdraw from the EPF account.
As per the new rules, a person can apply for an advance from the EPF account under the COVID-19 relief scheme. The advance only consists of the employee’s three-month basic salary and dearness allowance. Say, a person has an annual salary of 3.6 lakh and has worked with the organization for over 2 years. Now, as per the EPF calculation, the amount in the employee’s account is 1 lakh. Here, the employee can apply for an advance. As the monthly salary is INR 30,000, the employee will get 3*30,000 i.e. INR 90,000 from the EPF account. Here, the remaining INR 10,000 in the EPF account will remain untouched.
If a person does not want to apply for an advance, then he/she can even apply for a claim of 75% of the EPF amount. In this case, the person will get 75% of the 1 lakh in the EPF account under the COVID-19 Relief scheme. Whatever the case be, the employee cannot withdraw the whole amount from the EPF account. The EPFO has made this rule to ensure that the future of the employee is safe.
The government will contribute to the EPF scheme from June to August 2020 for the COVID-19 relief. But, this particular benefit is only for some establishments. The organisations where the salary of the employee is less than INR 15,000, will get this benefit. The government has even reduced the EPFO contribution for both employee and employer. It has decreased from 12% to 10% for employees in non-government organizations.
How To Check The Status Of The EPF Withdrawal Claim?
After filing for the withdrawal, you can even check the status of your claim. To check the status of your withdrawal claim, you have to log in to your account in the e-sewa portal. After that, you have to select the “Online Services” tab. Here, you have to select the “Track claim status” option.
The EPFO generally takes several days to review the claim and give a response. But, for the COVID-19 relief section, the EPFO takes only 72 hours to review the application. After reviewing, the EPFO will then start the process and then credit the amount to your account. You can track the whole process from your phone or laptop. It would help you to know the exact status and the number of days within which the money will come to your account.
Documents Required For Withdrawal Of Money From EPF Account
There are some documents that you need to submit while appealing for a withdrawal.
The EPFO has made it compulsory for the employees to submit the below documents.
- The employee needs to provide his/her UAN number. An employee can get the UAN number from the employer or the EPFO website.
- The employee has to submit the bank account details. The bank account details should match with the one mentioned in the EPF forms.
- The bank account should be in the name of the employee. The EPFO will not credit to a bank account which is not of the employee’s even if the employee is not alive. The EPFO does this to ensure that the amount is safe in the employee’s bank account and no one can claim it.
- The personal details of the employee should match with the identity proof. Here, the personal details include the parent’s name, date of birth, and as such.
- The EPF account should be KYC-compliant.
- The mobile number linked with the Aadhar card should be active
- The employee needs to submit all the details to the EPFO. Then he/she has to register the exit of the employee from the organisation. Here, the employee should mention the date of joining and the date of leaving.
Once an employee provides all documents, he/she can withdraw the EPF amount. The last point is not important for people withdrawing money as “emergency”. But, the employee needs to provide other documents for the withdrawal process.
Why An Employee Has To Fulfil These Criteria?
An employee must fulfill all the above-mentioned criteria due to safety measurements. By having an active UAN, the employee can view the status of the transfer of money online. By having the Aadhar card verified and linked with UAN, the EPFO finds it easier to transfer the money. If the Aadhar card is not linked with UAN, then the person has to link the Aadhar card with UAN. The registration of Aadhar with UAN is a long process. During this time an employee would prefer withdrawing the money from the account. Due to this reason, an employee who has fulfilled all requirements can withdraw money.
Tax Implications On EPF Money
There are certain rules about tax implications on EPF money. As per the general rule, if a person has worked for more than 5 years, then the EPF money is free from taxes. But, during the time of this pandemic, the government has decided to twist some of the rules.
As per the recent changes, an employee does not have to pay any tax if he/she is withdrawing money during this time. An employee who has worked for less than 5 years in an organisation, can also withdraw money. The employee does not have to pay any tax for EPF withdrawal during the pandemic.
During this time, if the EPF amount is taxable, then the employee will get less amount of money. This can lead to a major crisis for the employee. As the government cannot help the employees in any other way, it has applied this rule.
Impact Of EPF On Retirement Savings
The EPF scheme is one of the most prominent savings schemes that the Government of India has made. But, how will the COVID-19 withdrawal option affect the savings?
The COVID-19 withdrawal will affect the savings of the employee in one way or another. An employee can only withdraw 75% of the EPF amount from the account. The rest 25% of the amount will remain in the account as retirement savings. If an employee has started doing a job or is 5 to 6 years in the job, then it won’t make much difference. A person who has started doing a job and withdraws 75% of the EPF amount will not face any kind of loss. The reason is that the employee does have more years of service. He/she can work in the industry for more years and save enough money for retirement.
But, the same is not the case for employees who are reaching the age of retirement. An employee who is about to retire, if he/she withdraws money for the pandemic, it will affect him/her. In this case, the employee does not have many years of service left. If he/she will withdraw money, the employee might not get enough amount at the time of retirement. The EPFO suggests that one should withdraw the EPF amount only when it is very important.
How To Apply For Withdrawal If Aadhar Card Is Not Linked With UAN?
Employees who have opened EPF account in recent years have their Aadhar card linked with UAN. But, the same is not the case for all employees. Some employees have not linked their Aadhar card and bank details with UAN. Most of the employees of the age 50+ have not linked Aadhar with UAN. The reason is that, during that time, there was neither Aadhar card nor UAN.
With the growth of the industries, the government made these rules. These rules ensure that the accounts are completely secured. Due to this, employees do have to link their Aadhar card with the UAN. But, even if a person has not done so and needs to withdraw money from the EPF account for COVID-19 relief, he/she can do so.
For withdrawing money, one has to follow the hard application process. In this process, the employee has to claim in the new composite claim form. This form does not need any Aadhar card. Here, the employee has to fill out the form and then submit it to the office. The form should be self-attested and self-certified by the employer. During the submission of the form, the employee also has to submit his/her PAN card and a cancelled cheque. The EPFO will verify the details and then transfer the amount to the employee’s account.
What Are The Normal EPF Withdrawal Rules?
Before knowing the new EPF rules, you should know the normal withdrawal rules. It will help you to know the new rules in a better way. EPF is a savings scheme which encourages the employees to save money.
Both employee and employer contribute to the EPF accounts until the employee retires. This particular amount is then given to the employee at the time of retirement.
But, the EPFO has made some exceptions. These exceptions allow the employee to withdraw money before retirement. But, there are certain rules that the employee needs to follow. Only after following these rules, an employee can withdraw money from EPF account.
- The EPF money is taxable if the employee has less than 5 years of service in an organisation. If the employee is withdrawing money from the EPF account, he/she will pay taxes. Only after 5 years of service, the EPF account is free from taxes.
- It is not necessary that you have to withdraw the EPF amount while changing jobs. Here, the employee can directly transfer the EPF money to the new account.
- An employee who is currently working in an organisation, cannot withdraw the Provident Fund balance amount.
- An employee can appeal for an advance or loan on the EPF amount.
These are the rules that a person needs to follow while withdrawing money from the EPF account. Only after following all these rules, can a personal appeal for a withdrawal from the EPF account.
Eligibility Criteria For Withdrawing Money From EPF Account
Not everyone can claim for a withdrawal from the EPF account. As per the rules of the government, a person can only withdraw 75% of the EPF amount after reaching the age of 54. But, the employee will only get the remaining 25% of the amount at the time of retirement.
Furthermore, if a person remains unemployed for one month, then he/she can withdraw 75% of the EPF amount. If the person further remains unemployed, then he/she can withdraw the remaining 25% of the EPF amount.
But, there are always exceptions. If there is any kind of emergencies, then a person can appeal for a withdrawal from the EPF account. What are the kinds of emergencies? What are the eligibility criteria in such cases? Below are the detailed sections of each type of emergency as stated by the EPFO.
1. Medical Emergencies
In case of medical emergencies, the employees can withdraw money from the EPF account. But, there are certain rules about this allowance.
An employee can only withdraw his/her share from the account along with the interest rate. In an EPF account, both employer and employee contribute equally. In case of medical emergencies, the employee can only withdraw his/her part from the account. The employee can even withdraw six times the monthly salary from the EPF account. The EPFO will verify which of the 2 amounts is lower and will allow the employee to withdraw that amount only.
If the employee’s share of the amount is lower than the latter, then the employee will only get his/her share.
2. Home Loan Repayment
Another emergency crisis under the EPFO is the repayment of home loans. If an employee is in dire need of money for repaying a home loan, then he/she can withdraw money from EPF account.
In this case, the employee can withdraw around 90% of the corpus amount. The employee will only get the amount if the house is in his/her name. But, this rule is only applicable if the employee has worked for 3 years in the organization. The EPFO will only approve of the withdrawal if the employee fulfills all the rules.
A Wedding is one of the most common reasons about why employees apply for a withdrawal from EPF. But, not everyone is eligible to appeal for withdrawal under the “wedding” category.
An employee who has worked for 7 years or more, can withdraw the amount in this emergency. In this case, the employee can only withdraw 50% of the EPF amount along with the interest. The employee can only withdraw the money for his/her wedding, sibling’s wedding, or a child’s wedding.
It is well known that wedding costs fortune. To help the employee in this, the EPFO has included the “wedding” category in the emergency section. It has helped tons of employees to handle the cost of the wedding easily.
4. Renovation Or Construction Of House
Another category is the renovation or construction of the house. The employee can withdraw 12 times of his/her monthly salary for this case.
But, there are certain rules in this category too. Only if the house is under the employee’s name, the EPFO will approve the withdrawal. Moreover, the employee should have worked for 5 years in the organisation. After fulfilling these rules, an employee can withdraw money from the EPF.
5. Purchasing A House
If an employee is purchasing a plot or house, then he/she can withdraw money from the EPF account. The employee can withdraw the amount only if he/she has completed 5 years of service in the organisation. The employee can only withdraw the EPF amount under this category, for once in his/her whole life.
But, there are certain rules added to this category. The employee can withdraw money if only the house is in his/her name. Even if the house is held along with the spouse, the employee can appeal for withdrawal. The employee can withdraw 24 times the monthly salary. The employee can withdraw the total cost of the property, whichever is less in amount. Both employee and employer contribute to the EPF account. The employee can withdraw both the shares from the EPF account. The employee will even get the interest, which is available in the account.
EPFO will verify the amount, after which it will credit it to the account. The EPFO will only credit the lesser amount from all the options. The EPFO does that so that the employee does not spend more than the required amount.
1. Can an employee who has worked less than 5 years, withdraw from EPF during the pandemic?
Yes, anyone can withdraw from the EPF account under the COVID-19 relief option. The government has made this rule for all the employees. Even if an employee has recently started working, he/she can withdraw money for the pandemic.
2. How much amount can I withdraw from the EPF account during the pandemic?
You can withdraw 3 times of your monthly salary from the EPF account. Else, you can even withdraw 75% of the amount from the EPF account.
3. Will there be any taxes on the EPF amount, if I withdraw money under the COVID-19 relief scheme?
No, the EPF amount will be free from taxes, as per the new rules. Nobody has to pay any taxes while withdrawing from the EPF account. The Government made this rule due to the ongoing pandemic.
4. Can I apply for the withdrawal under the COVID-19 relief scheme, without linking my Aadhar with UAN?
Yes, you can apply for withdrawal even if your Aadhar is not linked with UAN. For doing this, you have to go through the hard application process. In this process, you have to fill out the form on your own and submit it in the office.
5. How can I withdraw money due to COVID-19?
You can withdraw money from EPF by following the normal online procedure. But, under the emergency section, you have to select the “COVID-19 Outbreak” option. By selecting this option, you can get the money from your EPF account.
The withdrawal from the EPF account under the “COVID-19 relief scheme” is non-refundable. It means that the employee does not have to return the amount or deposit the amount in his/her EPF account. EPF accounts are also called backup accounts. The made this Act to help the employees during the time of emergencies. During this pandemic, one can withdraw the amount stating that it is an emergency. The government is only contributing to selected establishments. But, it has even provided benefits for other employees as well. During this time, if a person is withdrawing money from EPF, it will be free from tax. Even if a person has worked only for a year in the organization, he/she can withdraw money without paying any taxes.