This article clarifies the nuances of managing an EPF account as an NRI, including withdrawal procedures, essential documents, and tax considerations
For Indians who have worked in their homeland and have either moved abroad or plan to do so, the fate of their investments becomes a pressing concern. Among these investments, the Employees’ Provident Fund (EPF) stands out as a vital component of their financial portfolio.
This article aims to shed light on the intricacies of managing an EPF account as a Non-Resident Indian (NRI). We will cover everything from withdrawal procedures, documentation requirements, tax implications, and the significance of Vakilsearch’s ITR services in ensuring financial well-being.
Understanding EPF for NRIs
The Employees’ Provident Fund (EPF) is a retirement scheme mandated by the Employees’ Provident Fund Organisation (EPFO) in India. Employees and employers make fixed monthly contributions to the employee’s EPF account, which accumulates over time.
Typically, this fund is accessed upon retirement, but there are provisions for early withdrawals, especially when NRIs are involved. This is because as per the Employees’ Provident Fund Act, if you are not employed in India, you will no longer be eligible to contribute to the EP fund.
When to Consider Closing Your EPF Account?
If your employer offers an EPF, you have the option to withdraw the funds and close the account before departing the country. Ordinarily, you would need to be 58 years old or retired to withdraw the entire amount. However, a special provision allows you to access the full amount if you are leaving your job and relocating to another country.
Closing Your EPF Account: Step-by-Step Process
Closing your EPF account before heading abroad is a prudent step. Here’s how you can go about it:
Obtain the EPF Withdrawal Form:
Request the EPF withdrawal form from your employer or download it from the EPFO portal.
There are two types of forms:
- Aadhaar-based form (if your Universal Account Number – UAN – is linked with your Aadhaar) and
- Non-Aadhaar form (if your UAN is not linked with your Aadhaar).
Submit the Form:
- If your UAN is linked to your Aadhaar, you can bypass your employer and submit the form directly at the local EPFO office.
- If your UAN is not linked to your Aadhaar, obtain your employer’s endorsement before submitting the application to the EPFO office.
- Ensure that you complete the form legibly and specify your reason for parting from your job as “Abroad Settlement.”
Attach Required Documents:
- Include self-attested copies of essential documents such as an Aadhaar card, proof of date of birth, local Indian address proof, PAN card, and more.
- Provide the details of your bank, including the IFSC code, by attaching a cancelled cheque from your preferred bank account for fund disbursement.
What is a Certificate of Coverage (CoC)?
For NRIs relocating temporarily for employment, signing up for a social security plan in the host country may be mandatory. To avoid dual contributions (in India and the host country), NRIs can obtain a Certificate of Coverage (CoC) from EPFO.
This certificate exempts them from contributing to social security programs in both India and their host country. India has such agreements with several countries, including Belgium, Germany, Switzerland, and more. However, EPF contributions must continue to maintain the account’s operability.
Closing Your EPF Account Online
- If your UAN is linked to your Aadhaar, you have the option to apply for EPF withdrawal online through the UAN member unified portal or EPFO’s UMANG App.
- Fill in the necessary details, indicating “Abroad Settlement” as the reason for quitting your job.
- Upload scanned copies of supporting documents (JPEG or PDF format) and complete the form with an OTP verification.
The Takeaway
Managing your EPF as an NRI involves making informed decisions about withdrawals and account maintenance. It’s crucial to understand the exact rules, procedures, and tax implications to secure your financial future.
Seek guidance from experts like Vakilsearch to navigate the complex landscape of NRI taxation confidently. Whether you choose to withdraw your EPF or not, take control of your finances to ensure peace of mind. Get in touch with our experts today!
FAQs
What is the full form of EPF?
EPF stands for Employees' Provident Fund.
What is the full form of PPF?
PPF stands for Public Provident Fund.
How long must I wait before withdrawing all my EPF funds when going abroad?
You can withdraw the entire EPF balance immediately if you are relocating abroad for employment, even if you are not retiring.
