Withdrawing From PF Account | 7 Rules You Should Know Before Withdrawing From PF Account | FinCalC [VIDEO]

It is possible to withdraw from your PF Account before the retirement age of 60 years. The EPFO (Employee Provident Fund Organization) has made the withdrawal process easy and reduced the time taken for money to be credited into your Bank Account.

There are certain things that you should know before withdrawing from your PF Account.

WATCH VIDEO:

1. Only 75% of balance can be withdrawn after One month of Unemployment

The EPFO will allow you to withdraw money only in fractions. You can withdraw up to 75% of your total outstanding balance after one month of Unemployment.

So, though you are unemployed, you will be allowed to withdraw from your PF account only after 1 month, up to 75%.

You can withdraw when you are employed only when you meet certain conditions.

2. Withdraw 25% of balance after Two months of Unemployment

Remaining 25% of balance can be withdrawn after 2 months of Unemployment.

3. Withdrawal is TAXABLE if withdrawing before Five years of Continuous Services

It is important to note that it you withdraw from PF Account before completing 5 years of continuous services, you will be taxed in that Financial Year.

You have to work for at least 5 years in order to avoid Income Tax on the PF withdrawal Amount.

4. New Organization adds up in Five years of Continuous Services

So if you switch the job after working in an Organization for 4 years, the period in the new Organization will continue to add in the 5 years continuous services.

You don't have to work for 5 years in the new Organization to avoid the Income Tax. The working period is cumulative in all Organizations you work.

5. 10% TDS applicable in case if Withdrawal is before Five years of services

So not only you will be taxed if you withdraw before your 5 years of services, but a TDS of 10% is also applicable in the same scenario.

Make sure that you are not withdrawing before 5 years of services to avoid the taxes.

6. TDS is not applicable if withdrawal is less than Rs. 50,000

There is a condition where you can avoid TDS if withdrawing before 5 years of services. If the amount withdrawn is less than Rs. 50,000, TDS is not applicable

7. Avoid TDS by submitting Form 15G or 15H

You can avoid the TDS if you don't fall under any Tax Slabs, that is, if you are not taxable in that Financial Year. In that case you can submit Form 15G to avoid TDS.

Form 15H is for senior citizens.

So these are some of the things you should know before withdrawing money from your PF Account. Most importantly, you will not be taxed if you are withdrawing after 5 years of continuous services in case you are Unemployed. Withdrawal is exempted from Tax in such cases.

It is recommended to treat PF Account as a Retirement Account and take benefit of this scheme to let your money grow.

___

I'd love to hear from you if you have any queries about Personal Finance and Money Management.

Download our Free Android App - FinCalC to Calculate Interest on PF Account.

Follow the Blog and Subscribe to YouTube Channel to stay updated about Personal Finance and Money Management topics.
___