If you also withdraw your PF (Provident Fund) money immediately when you need it, then this news is very important for you. The Employees’ Provident Fund Organization (EPFO) has recently issued a stern warning to account holders who want to withdraw their life savings for reasons not covered by government rules.
What is premature withdrawal?
Withdrawal from EPF account before retirement is called premature withdrawal. It may be partial or complete. According to the rules, if the withdrawal is made for reasons other than those mentioned in the EPF Scheme 1952, it will be considered a violation. In such cases, EPFO can recover the wrongly withdrawn amount along with interest and can also impose additional penalty.
When can you make withdrawals?
EPFO members can withdraw money prematurely under certain circumstances.
Complete Withdrawal: At the time of retirement or being unemployed for more than two months. Partial Withdrawal: For reasons like home purchase, construction/repair, loan repayment or medical emergency. Keep in mind, on resignation, one has to wait for two months before withdrawing PF. At the same time, if a member withdraws PF before completing 5 years of service, then both tax and TDS will be levied on it.
Strict action against misuse
The rules of EPF Scheme 1952 clearly state that if the withdrawal amount is used for something other than the stated purpose, then EPFO will consider it wrong and will recover it. For example, if someone takes PF withdrawal in the name of building a house and later uses that amount somewhere else, then the entire amount along with interest will have to be returned.
ban for three years
According to Rule 68B(11), if a member misuses PF withdrawals, new withdrawals will be barred for the next three years or until full recovery is made (whichever is later).
Why did the warning come?
According to media reports, this warning has been given before the launch of the government’s digital platform EPFO 3.0. Services like PF withdrawal will become faster and easier through this platform. EPFO wants members to use their savings in the right place, so that their future security is not affected.