New Delhi: An employee provident fund (PF) is a long-term savings and investment account. It is noteworthy that this is a savings fund created by the contribution of the employee, management and in some cases the government.
It is a social security scheme run by the Employees Provident Fund Organization (EPFO). This fund ensures the financial security of the employees after retirement. The amount deposited in the PF account for several years will be paid to the employee at retirement along with interest.
PF is generally seen as a pension fund. Often no one thinks to withdraw money from these funds before retirement. Beneficiary can receive PF amount if the employee dies after retirement or before retirement. However, in some situations, employees may need to withdraw money from the PF before retirement.
Method of withdrawing money from PF before retirement
The government had earlier provided facilities to withdraw money from PF before retirement. However, in view of the Govt-19 epidemic, the government has offered some more relief to the people in this regard.
Under the new rules, employees can take a net balance of 75 per cent of their base salary or PF account for 3 months. For this, you can apply online. The process will be completed in 3 business days.
Apart from this, you can also withdraw money from PF for home loan. You must have worked for 60 months for this. You can withdraw money from PF even if you are not working for 2 consecutive months.
Apart from this, you can also take PF money for yours, children and siblings’ marriage or education of children after 10th class. However, this request is only valid if you have worked for 84 months. Also, one can take 90 per cent of the PF amount one year before retirement.
What is the new income tax rule related to PF?
The government has started levying tax on interest earned through BP from April 1 this year. Under the new income tax rules, if an employee’s PF contribution exceeds 2.5 lakh in a financial year, he is liable to pay tax on the interest he receives. From April 1, PF accounts will be divided into taxable and non-taxable areas. The federal government issued new income tax rules in August 2021.