How much can you withdraw from an EPF account due to COVID-19

The EPF Scheme, 1952 provides for the grant of advance to members when a disaster or epidemic has been declared by the government. The advance is intended to help employees meet their financial needs during the lockdown period.

In March 2020, the government had decided to give relief to small businesses who were facing cash crunch due to coronavirus pandemic. A decision was taken to pay both the employer and the employee contribution to EPF account of employees under Pradhan Mantri Garib Kalyan Yojana. The benefit was for establishments with up to 100 employees and where 90% of those employees draw a salary of less than Rs 15,000 per month. The benefit was available up to May 2020. However, the government had further extended the benefit for another three months from June to August 2020.

The contribution to EPF was reduced to 10% from 12% for both employee and employer contribution for non-government organisations. The interest rate applicable to the EPF contributions is 8.5% for FY 2020-21.

Can all employees withdraw from their EPF account?

All employees who contribute to EPF can apply for an advance from their EPF accounts. For the purpose of withdrawal, an employee must have a Universal Account Number (UAN) allotted by EPFO and must link their Aadhaar, PAN and bank account with their UAN.

How much can be withdrawn from EPF account?

Employees can obtain an advance from their EPF balance up to three months’ salary or wages plus dearness allowance, or 75% of the balance standing in their account, whichever is less. The advance is non-refundable and the employee need not deposit the money withdrawn back into their EPF account. The withdrawal will provide liquidity in the hands of employees during the COVID-19 lockdown. Employees seeking an advance can make an online application using their login on the EPFO’s website.

For example, Mr Z, an employee of a factory with an annual salary of Rs 7.2 lakh desires to obtain an advance from his EPF account as the factory is shut down due to the spread of COVID-19. Mr Z has a basic salary of Rs 3.6 lakh which is Rs 30,000 per month. Mr Z has been in employment for more than two years and his accumulated balance in EPF account stands at Rs 1 lakh. Here, Mr Z can withdraw lower of the below amounts:

• Rs 90,000 (Rs 30,000*3): Basic salary for three months
• Rs 75,000 (75% of Rs 1,00,000): 75% of the balance standing in the member’s account.

Mr Z can withdraw Rs 75,000 as non-refundable advance from his EPF account

Procedure for EPF withdrawal

Any member of the EPFO employed in an organisation affected by the epidemic or pandemic can make an application to the Commissioner seeking an advance from their EPF account. The withdrawal can be made either by:

• Submitting a hard copy of the application
• Submitting an online application

Online application

An online application can be submitted as below:

• A member with a UAN (Universal Account Number) should login to the EPFO’s website.
• Under the tab ‘Online Services’, choose the option ‘Claim (Form-31, 19 and 10C)’
• The next screen will display the details of the member and ask for ‘last 4 Digit’ of the member’s bank account number
• After verification, the member should click on ‘Proceed for Online Claim’
• The member has to apply for ‘PF Advance (Form 31)’
• The purpose of the advance should be indicated as ‘Outbreak of pandemic (COVID-19)’
• The member should mention the amount of advance required, provide their address and a scanned copy of bank cheque
• Request for an Aadhaar OTP to verify
• Fill the OTP received on the registered mobile number (with Aadhaar authorities)
• Submit the application

Hard copy application

Employees who have linked their Aadhaar number and bank account with their UAN can submit their claim in the new composite claim form (Aadhaar) with the respective jurisdictional EPFO’s office. The Aadhaar-based form should be self-certified, but does not require attestation by the employer.

However, in the case of employees who have not linked their Aadhaar number and bank account with their UAN, the claim has to be made in the new composite claim form (Non-Aadhaar). The form should be self-certified and also requires attestation by the employer.

In both the cases, the employee should submit their PAN and a cancelled cheque along with the application for processing the amount into their bank account. The amount of withdrawal will be directly credited to the member’s bank account. The withdrawal in the form of non-refundable advance is allowed from 28 March 2020.

Tax implications

The facility of EPF withdrawal and obtaining a non-refundable advance is to help employees in need of money amidst the COVID-19 lockdown. Employees are given the option of using their EPF savings to meet their financial needs.

An EPF withdrawal is tax-exempt only if the employee renders a continuous service for five years. However, in a case where a facility of advance is provided due to a pandemic situation, a tax or TDS on the withdrawal will defeat the purpose of the advance, that is to provide liquidity.

The EPFO clarifies and states that there is no income-tax liability on the amount of advance an employee withdraws due to COVID-19.

Frequently Asked Questions

Can I claim through mobile phone?

Yes, you can claim advance through UMANG (Unified Mobile Application for New-age Governance) Mobile APP. Go to Home> EPFO> Employee Centric Services> Raise Claim> Login with your UAN and OTP received on your mobile number registered with UAN.

I have not left my job. Can I claim for COVID-19 advance?

Yes, you can claim for the advance while still in service.

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