Employees’ Provident Fund Organization or EPFO, the nodal agency that monitors the Employees’ Provident Fund (EPF) contributions, allows the subscribers to make a partial withdrawal or 'advance' from the PF corpus under certain circumstances.

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Many people may be considering EPF withdrawals in view of the second wave of the COVID-19 pandemic. Financial advisors, however, say that it is not advisable to make these withdrawals, but investors could do so in order to meet their short-term needs.

Let's understand all rules related to EPF withdrawal here:

How are EPF withdrawals taxed?

EPF withdrawals are taxable at some instances and exempted under other instances. If a person withdraws EPF post completion of five-year service, then it's tax-free. But, if the person withdraws it without completing the five-year tenure, in that case, it’s taxable with a few exceptions such as employment termination and medical emergencies

The EPF amount is also taxable if there is a break in the contribution to the account for five continuous years. In that case, the entire EPF amount is considered as taxable income for that financial year.

What are the requirements for EPF withdrawals?

In order to apply for EPF withdrawal online, the subscriber must have an active Universal Account Number (UAN) and the mobile number used for activating the UAN number should be in working condition.

The UAN should be Know Your Customer (KYC)-verified by furnishing information such as Aadhaar, Permanent Account Number (PAN), and bank details.

How can a subscriber put a claim for EPF withdrawal?

The subscriber can put a claim for 'advance' withdrawal via EPFO's unified portal -- unifiedportal-mem.epfindia.gov.in. The claim is then forwarded to the employer for approval. Once approved, the amount is credited to the subscriber's account.

Here are the steps to initiate an EPF claim online:

Login to the EPFO portal - unifiedportal-mem.epfindia.gov.in using UAN and password

Go to 'online services' and select 'claim' section

Verify the bank account number

Upload a scanned copy of a cheque or the passbook

You will be asked a reason for submitting the advance. Select the appropriate reason

Generate an Aadhaar-based OTP. Once the claim is processed, it will be forwarded to the employer for approval.

Under what conditions, EPF claim can be rejected?

While it takes up to 10 days for the money to be credited to the bank accounts of subscribers, there may be instances when claims are rejected.

The rejection can be on account of non-updation of bank account numbers and IFSC codes on the EPFO members portal. Another reason for the rejection of the EPF claim withdrawal can be due to incomplete KYC. If the KYC details are not complete and verified, then the EPFO can reject the EPF withdrawal claim. An unclear cheque can also lead to claim rejections.

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