Employees’ Provident Fund (EPF) is a retirement fund for salaried employees. Every month, 12% of the employee’s basic salary is contributed to the EPF account. The employer will also contribute 12% of the employee’s salary towards EPF. Contribution towards an EPF account provides a benefit to individuals by way of a deduction under Section 80C
Interest rates for Provident Fund
The interest rate of 8.5% p.a. is provided to the provident fund for Financial year 2024-25.
Can a full amount of PF be withdrawn?
A person can withdraw full amount of Employee Provident Fund (EPF) corpus under the following circumstances –
1. Retirement – One can withdraw the entire EPF corpus when the person retires (58 years), or up to 90% of it before he retires if he is at least 55 years old.
2. Unemployment – If a person is unemployed for more than two months, he can withdraw his entire EPF corpus. However, if any person is unemployed for more than a month, he can withdraw 75% of his EPF corpus, and the remaining 25% after two months.
Reasons for Partial Withdrawal of EPF
An employee can withdraw EPF partially for the following reasons upon fulfillment of certain conditions:
- Medical purposes
- Marriage
- Education
- Purchase of land or purchase/construction of house
- Home loan repayment
- House renovation
Tax on EPF withdrawal
EPF withdrawal is taxable under certain circumstances and exempt under certain circumstances. The taxability of EPF withdrawals depends on the timing and reason for the withdrawal:
| Time period | Taxability | TDS |
| Before 5 Years of Continuous Service: | Taxable, the amount is added to the income for the year and taxed according to income tax slab applicable to the assessee.
This includes both the employer’s contribution and the interest earned. |
TDS (Tax Deducted at Source) is deducted at 10% on EPF withdrawals over ₹50,000, provided PAN is submitted. |
| After 5 Years of Continuous Service | Withdrawals after completing five years of continuous service are exempt from tax.
This period includes service with previous employers, if the EPF balance was transferred from the previous employer to the current one. |
No TDS, exempt from Income Tax. |
| Exceptional Circumstances | In cases of termination due to ill-health, discontinuation of business, or other reasons beyond the employee’s control, withdrawals are not taxable even if the service is less than five years | TDS (Tax Deducted at Source) is deducted at 10% on EPF withdrawals over ₹50,000, provided PAN is submitted. |
| Upon Retirement | Withdrawals made after reaching 58 years of age or upon retirement are tax-exempt. | No, TDS, exempt from Income Tax. |
| Partial Withdrawals for Specific Purposes | Certain partial withdrawals from EPF for specific purposes like medical treatment, marriage, education, or home loan repayment are exempt from tax, subject to conditions | No TDS, exempt from Income Tax if withdrawn before 5 years of service for medical purposes |
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