Provident Fund


The Employees’ Provident Fund and Miscellaneous Provisions Act applies to every establishment where 20 or more people are employed, these include any industry engaged in manufacture of  almost everything. The list of the included industries is present in the Schedule I of the Act.

Apart from the employees working in India, the EPF Act and the EPF Scheme also cover International Workers (IW) within its ambit.

Contribution Rate:

The present contribution rates are as follows-

Contribution by Contribution Rate
Employer 12% of basic wages and dearness allowances
Employee 12% of basic wages and dearness allowances


Despite the described rates, the contributions are payable on maximum wage ceiling of Rs. 15000/- 

The employee can pay at a higher rate and in such a case the employer is not under any obligation to pay at such a higher rate. To pay contribution on higher wages, a joint request from Employee and employer is required.  In such a case the employer has to pay administrative charges on the higher wages (wages above 15000/-).

And for an International Worker, the wage ceiling of 15000/- is not applicable.

Interest Rates:

The EPF Interest Rates of last 10 years are reflected below to give an idea of the trend-

Year EPF Interest Rates
2019 – 2020 8.50%
2018 – 2019 8.65%
2017 – 2018 8.55%
2016 – 2017 8.65%
2015 – 2016 8.80%
2013 – 2015 8.75%
2012 – 2013 8.50%
2011 – 2012 8.25%
2010 – 2011 9.50%
2005 – 2010 8.50%

Advance and Withdrawals:

Employees’ Provident Fund can be withdrawn in either of the below cases-

  • At the time of retirement (On or after 58 years of age)
  • If unemployed for two months of time
  • Death before the specified retirement age

EPF withdrawal credentials are as follows:

Purpose Eligibility Limit
Medical Emergency for member/spouse/parent/children Any PF Member Lesser one of employee’s share plus interest or 6 times of the monthly salary
Construction/Purchase of New House Employee must have served min 5 years 90% of the PF Balance
Renovation of House Can be withdrawn after 5 years from the construction of house 12 times of the employee’s monthly salary
Repayment of Home Loan Employee must have served for min 3 years 90% of the PF Balance
Wedding of member/sibling/children Employee must have served for min 7 years 50% of employee’s share plus interest

Eligibility on various Types of EPF Withdrawals:

  • For Medical Purposes-
    • An employee is allowed to withdraw employee’s share with interest or six times the monthly salary (whichever is lower) from the provident fund for the purpose of medical treatment
    • This withdrawal is applicable for medical treatments of self, spouse, children, and parents
    • There is no lock-in period or minimum service period for this type of withdrawal
  • For Repaying Home Loan-
    • For the purpose of repaying the outstanding home loan, the PF member is allowed to withdraw up to 90% of the corpus if the house is registered in his or her name or held jointly
    • However, to withdraw the amount, at least 3 years of complete service is required
  • For Wedding- 
    • At least 7 years of service must be completed in order to be eligible for the withdrawal
    • 50% of the employee’s contribution with interest can be withdrawn
    • An employee can withdraw funds for his own, siblings or child’s marriage
  • For Renovating and Reconstructing a House-
    • The employee can withdraw funds from his EPF account for the purpose of renovation and reconstruction
    • The house should be held in his/her name or held jointly with the spouse
    • The employee must complete at least 5 years of total service
    • The member can withdraw 12 times his monthly salary from his Provident fund account
  • For Purchasing or constructing a New House-
    • A PF member can withdraw a partial amount from his employee provident fund for the purpose of purchasing a plot and/or constructing it
    • The property should be registered in his or her name or held jointly with the spouse
    • An employee should have completed a minimum of 5 years of total service
    • 24 times of the monthly salary for purchasing a plot/36 times of the monthly salary for purchasing or constructing a house or the cost of the property or the total of employee’s and his employer’s share along with the interest amount (whichever is less) can be withdrawn
    • Withdrawal is allowed only after completing 5 years of service
    • Withdrawal for the purpose of purchasing a plot and constructing it can be done only once in the entire service tenure
  • Retirement-
    • A person can withdraw his or her entire provident fund corpus after completing 58 years of age
    • The employee is allowed to withdraw up to 90% of the provident fund balance
  • Unemployment-
    • A person can withdraw 75% of his or her provident fund if he/she is unemployed for more than a month
    • For unemployment of more than 2 months, remaining 25% of the corpus can be withdrawn

EPF Withdrawal Rules:

Employees’ Provident Fund is an investment scheme created for the purpose of retirement. Withdrawal should be prevented until and unless it is an emergency. However, in case a member wants to withdraw funds from his EPF account, he should keep the following EPF withdrawal rules in mind-

  • Provident Fund that is withdrawn within 5 years of account opening is taxable
  • It’s not necessary to withdraw provident fund when you change your employer as PF can easily be transferred to a new account through the online process
  • As per the rules, one cannot withdraw Provident Fund balance of a job where you are currently employed
  • Loan (Partial withdrawal) can be availed on employee provident fund

Considering the early withdrawals by the employees, the Government of India made some amendments to employee provident fund in 2016. Here are the main amendments to EPF withdrawal rules-

  • 90 % of the EPF balance can be withdrawn after the age of 54 years
  • After leaving a job, a person can withdraw 75% of the provident fund balance if he remains unemployed for 1 month and the remaining 25% after the second month of unemployment

EPF Withdrawal before 5years of Service:

EPF withdrawal before 5 years of continuous service attracts TDS on the withdrawal amount. However, if the withdrawal amount is less than ₹ 50,000, no TDS is deducted. In case you want to withdraw your funds before 5 years of service, you should keep the following EPF withdrawal rules in mind-

  • As per the latest modification in ITR Forms 2 and 3, the assesses has to provide a detailed breakup of the entire amount deposited in PF account every year
  • This will help the Income Tax Department to assess whether the withdrawal made by you is taxable or not
  • The department will also check whether additional tax has to be paid by you after revaluation
  • EPF contribution is done in four parts – Employee’s contribution, employer’s contribution and interest on each deposit
  • If the employee has claimed exemption on EPF contribution for previous years as per Section 80-C, all four parts will be taxable
  • If the employee has not claimed exemption in the previous year on EPF, the employee’s contribution part will be exempted from tax at the time of withdrawal
  • The tax will depend on the income slab in which the employee fell for that year
  • The tax will be applicable in the year of withdrawal but the consideration will be done for each year.

Withdrawal after Retirement:

  • As per the EPF Act, when a member retires at the age of 58 years, he has to apply for the claim of his final settlement
  • The total PF balance consists of both employee’s as well as the employer’s contribution
  • The member also becomes eligible for the EPS amount if he has served for a period of more than 10 years in continuation
  • In case the member has not completed 10 years of service at the time of retirement, he can withdraw the complete EPS amount along with his EPF
  • If he completes 10 years of service, the employee gets pension benefits after retirement
  • The withdrawal of corpus accumulated in the EPF account after retirement is completely tax-free
  • The interest earned on the EPF corpus after retirement is taxable
  • An employee who has registered at the EPF member portal can fill the form and claim his funds online
  • If the member does not withdraw funds for three years after retirement, he will have to pay tax on the interest earned.

PF Withdrawal for Home Loans:

EPF members can utilize the fund accumulated in their EPF account to facilitate their housing needs after three years of account opening. As per the newly added Para 68-BD in the EPF Scheme, 1952, EPF members can apply for a withdrawal of up to 90% of the accumulated corpus for either making the down payment of the house or for the payment of EMIs or for the construction of a new house.

Earlier, the maximum withdrawal amount was limited to the total contribution of the employee and the employer with interest of 36 months or the cost of the property, whichever was less. The member was also not required to be a member of the housing scheme to avail this facility. He just had to be a member of the EPF for five years.

After the insertion of Para 68-BD in the EPF Scheme, 1952, the members got more options to utilize their funds. The time limit (from account opening) has also been reduced to 3 years. The minimum PF balance of the member should be more than ₹ 20,000 either individually or including that of the spouse in case he/she is also a member of the EPFO. However, a member can withdraw the PF balance only once in a lifetime to pay for the property.

Some important features of home loans on EPF are as follows-

    • The applicant should be a member of a registered housing society having at least 10 members
    • The bank can use the Commissioner’s certificate of PF contributions to calculate EMIs for withdrawal
    • Composite claim forms can be used to avail this facility
    • The member has to provide the letter of authorization for paying EMI from PF
    • The facility can be clubbed with Pradhan Mantri Awas Yojana (PMAY) to avail subsidy on housing.