How to use your provident fund for Home Loan, Medical, Retirement

The Employees’ Provident Fund, also known as EPF is a fund, based on the long term investment made by the contributions of the worker, his employer and also the government. Considered to be a program meant for social security , this was started by our government to provide the old people after their retirement, a means to fall back upon. EPF depends upon the amount that has been invested over the years, with stipulated interest and it is handed to the worker when he retires. Nevertheless, an employee will have to follow quite a few rules while withdrawing money from his Provident Fund.

A stipulated body known as the Employees’ Provident Fund Organization (EPFO) is responsible for dealing with all provident fund related work in BBG India. Usually, 12 % of a person’s salary (i.e. basic +DA) is added to his Provident Fund. The employer also makes an equal contribution to this. But one must remember that only 3.67% of employer’s grant will go towards a person’s EPF account while the rest will go the person’s pension scheme.

There are three possibilities when one can withdraw from their provident fund:

• When the employee retires at 58 years of age or above
• When the employee has been unemployed for two months
• When the employee dies before his specified retirement age

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Things to remember before withdrawing your provident fund

EPF fund is a retirement scheme for old people after they retire from their service. One must not withdraw it beforehand unless there is an emergency. But even while withdrawing funds from the EPF account, these are the few things that the employee must keep in mind:

• If you withdraw provident fund within five years of opening the account, then taxes apply to it
• If you change your employer, you don’t have to withdraw your entire provident fund. You can simply transfer it to a new account using an online process
• If you are employed and working, you cannot withdraw your provident fund from the current job
• Loans or partial withdrawals can be made based on your provident fund.

Documents Required to create and access your Provident Fund

• The employee must have a Universal Account Number (UAN).
• EPF account creation and access requires the bank details of the employees
• The provident fund account should be named after the employee and it cannot be withdrawn by a third party before the holder dies.
• Valid identity proof must be provided for information related to the father’s name of the employee and his date of birth.
• The employer must submit necessary details about the employee to the EPFO as and when required

What are the taxes levied on EPF Withdrawals

• TDS will be subtracted if EPF is withdrawn anytime before five years from opening the account.
• The rate of TDS deduction is 10% on the withdrawal. If the PAN is not furnished the rate can go up to 36%
• No TDS is deducted when the withdrawal money is less than 50,000

EPF Withdrawal Rules based on different withdrawal purposes:

• For Medical Purposes:

1. A provident fund holder is allowed to partially withdraw money from his EPF account with added interest for any medical treatment scheme.
2. The withdrawn money can be used for his medical treatment or that of his spouse, children etc.
3. There is no required minimum-service period for this type of partial withdrawal.

• For Repaying Home Loan:

1. To repay his home loan, the employee can draw up to 90% of hid provident fund amount.
2. But to withdraw this amount, the employee needs to have three complete years of service.

• Retirement :

1. A provident fund holder can withdraw his entire EPF amount after retirement, when he is 58 years of age or above but not before that.
2. The employee is allowed to take out 90% of his outstanding balance at a time.

Hence it can be concluded, that after retirement in BBG India, one can withdraw their provident fund money easily by following the aforementioned rules. EPF money can be used for different purposes. This money will act as security for old people and support them after their retirement.