EPF or Employees’ Provident Fund is a popularly used retirement plan for public and private sector employees. This is a government-backed and funded investment scheme. Employees contribute 12% of their basic salary plus dearness allowance. Employers also contribute 8.33% of the same to the Employee Pension Scheme and 3.67% to Employees’ Provident Fund.
Currently, EPF interest rates are revised at 8.65%, higher than most FD interest rates or those offered on other investment schemes.
Since May 2019, the website of EPF allows its members to submit Form 15G online in case of EPF withdrawal so they can avoid TDS.
Firstly, it must be made clear that the EPF corpus is exempt from taxation if withdrawn after retirement. However, EPF withdrawals before retirement are taxable.
The process to submit 15G online for EPF withdrawal
As the first step, you need to go to the online portal of Employee’s Provident Fund Organization for members. Now, here are the following steps –
- Similar to any other online form submission process, you first need to login as a member of EPFO UAN Unified Portal using credentials such as UAN number and password.
- Now, you have to click on a button called Online Services which you will find on the top menu bar. On the drop-down, click on Claim (Form-31, 19, 10C, and 10D). Enter details as required – name, PAN number, contact details and date of birth.
- Here, by providing your bank details, you need to authenticate the bank account of yours.
- A notification will show up asking you to verify the bank account where the withdrawal amount will be credited.
- In the next step, you can find Form 31 once you select the claim option. However, if you left your job and it has already been updated with your EPF account, you will be able to find withdrawal Form 19.
- Now, you can upload Form 15G for the withdrawal option.
- Download 15G and fill up only Part 1 of it and upload it in PDF format to this portal.
- You need to continue with other details.
Rules related to EPF withdrawal
TDS is applicable on EPF withdrawal. Here are the other rules –
- If the withdrawal is requested before completing 5 years of employment, the amount withdrawn will be subjected to taxation.
- A tax slab of 10% will be applicable in such instances. Without submitting the PAN, a tax slab of 30% will be applicable.
- TDS will still not be exacted if the withdrawal amount is less than Rs.50,000. Tax will also not be levied if the employer closes down the organization.
- In case of withdrawal before 5 years, the employer’s contribution and interest income will be taxed under the income from the salary of the individual in question.
- The interest income from the employee’s contribution will be considered as ‘income from other sources.’
EPF withdrawal and Form 15G
You can withdraw from EPF prematurely and still avoid taxes by submitting Form 15G provided that their net annual income is under the taxable threshold of Rs.2.5 lakh per year.
EPF is considered one of the safest avenues to invest money. Similarly, a fixed deposit can also provide substantial interest rates as well as guaranteed returns.
If you are considering an investment in bonds, you should know the difference between bonds and fixed deposits before making a choice.
Make sure you have a proper idea of how you quickly you want to build a corpus, for what purpose would you like to use it, and how much risk are you willing to take for it. Know how to manage your money more effectively to plan your finances fruitfully.
Refer to not just the high but investment security as well. You can consider the reputed NBFC Bajaj Finance which offers FD interest rates of up to 8.10%, as well as multiple other benefits including loans against fixed deposits as well as CRISIL, rated guarantees on the investment made.