Learn about the rules for PF withdrawal after resignation. Know the process and tax implications. Read more to understand.
Introduction – Rules to Withdraw PF After Resignation
The Employee Provident Fund (EPF) scheme is a retirement savings scheme that is designed to help salaried employees save for their retirement. Every employee who earns a salary of less than ₹ 15,000 per month is mandatorily enrolled in the scheme. Under the EPF scheme, both the employer and the employee make monthly contributions towards the employee’s retirement fund. When an employee resigns from their job, they have the option to withdraw their PF balance or transfer it to their new employer. In this blog post, we will discuss the Rules to Withdraw PF After Resignation and the options available to an employee.
PF Withdrawal Options After Resignation
When an employee resigns from their job, they have three options with regard to their PF balance:
- Option 1: Withdrawal of the entire PF amount – An employee can choose to withdraw their entire PF balance after resignation. This option is available to employees who have not been employed for more than five years.
- Option 2: Transfer of PF balance to a new employer – An employee can choose to transfer their PF balance to their new employer. This option is available to employees who have been employed for more than five years and have a new employer who is registered with the EPFO.
- Option 3: Keep the PF account active – An employee can choose to keep their PF account active even after resignation. This option is available to employees who have been employed for more than five years and do not have a new employer who is registered with the EPFO.
Rules to Withdraw PF After Resignation for Different Employment Tenures
The Rules to Withdraw PF After Resignation vary depending on the duration of an employee’s employment. Let’s take a look at the different rules based on an employee’s tenure:
- Less than 5 years of service – If an employee has worked for less than five years, they are eligible to withdraw their entire PF balance after resignation. The employee is required to complete Form 19 and submit it to the EPFO along with the required documents.
- Between 5 and 10 years of service – If an employee has worked for more than five years but less than ten years, they are eligible to withdraw their entire PF balance after resignation. However, if the employee chooses to withdraw their PF balance, they will be subject to tax deductions as per the tax rules applicable at the time of withdrawal. Alternatively, the employee can choose to transfer their PF balance to their new employer or keep their PF account active.
- More than 10 years of service – If an employee has worked for more than ten years, they are eligible to withdraw their entire PF balance after resignation. However, if the employee chooses to withdraw their PF balance, they will be subject to tax deductions as per the tax rules applicable at the time of withdrawal. Alternatively, the employee can choose to transfer their PF balance to their new employer or keep their PF account active. Additionally, the employee will be eligible to receive a monthly pension under the EPS scheme.
Tax Implications of PF Withdrawal After Resignation
PF withdrawal after resignation has certain tax implications that employees need to be aware of. Let’s take a look at the tax rules for PF withdrawal based on an employee’s tenure:
Taxation rules for less than 5 years of service – If an employee has worked for less than five years, their PF withdrawal will not be subject to tax deductions.
Taxation rules for more than 5 years of service – If an employee has worked for more than five years, their PF withdrawal will be subject to tax deductions. If the employee has not completed five years of service, they will be subject to TDS at the rate of 10%. If the employee has completed more than five years of service, they will be subject to TDS at the rate of 10% if they have submitted their PAN details at the time of withdrawal. However, if the employee has not submitted their PAN details, they will be subject to TDS at the rate of 34.608%.
It is important to note that the tax deducted at source (TDS) is not the final tax liability of the employee. The employee’s final tax liability will be calculated based on their income tax slab for the financial year. If the TDS deducted is higher than the actual tax liability, the employee can claim a refund when filing their income tax returns.
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How to Apply for PF Withdrawal Online?
The process of applying for PF withdrawal after resignation has become much simpler with the introduction of online services by the EPFO. Here’s how an employee can apply for PF withdrawal online:
- Step 1: Visit the EPFO website and log in using your UAN and password.
- Step 2: Click on the ‘Online Services’ tab and select ‘Claim (Form-31, 19 & 10C)’ from the drop-down menu.
- Step 3: Verify your personal details and bank account details.
- Step 4: Fill in the details of your previous employer and the reason for leaving the job.
- Step 5: Select ‘Form 19’ from the claim options and enter the amount you wish to withdraw.
- Step 6: Submit the application and wait for the amount to be credited to your bank account.
Conclusion – Rules to Withdraw PF After Resignation
In conclusion, the Rules to Withdraw PF After Resignation depend on the duration of an employee’s employment. Employees who have worked for less than five years can withdraw their entire PF balance after resignation without any tax deductions. However, employees who have worked for more than five years will be subject to tax deductions if they choose to withdraw their PF balance. It is important to note that the tax deducted at source is not the final tax liability of the employee. The employee’s final tax liability will be calculated based on their income tax slab for the financial year.
Employees can apply for PF withdrawal online by visiting the EPFO website and logging in using their UAN and password. The online application process has made it much simpler for employees to withdraw their PF balance after resignation. With the introduction of ESIC new services, employees can now manage their EPF and other social security benefits in a more efficient manner.
Vakilsearch provides consultation services where they explain the process of PF withdrawal and answer any questions that an individual may have regarding the withdrawal process. Vakilsearch can help an individual prepare the necessary documents required for PF withdrawal, such as the PF withdrawal form and other supporting documents. Vakilsearch can also provide follow-up services to ensure that the PF withdrawal is processed correctly and the individual receives the funds in their bank account.
Read more,
- EPF Form 15G
- Procedure For Registration of EPF
- How to know My PF Account Number by Name?
- How to Transfer PF Account through Online?
