COVID 19: PF New Rules And How To Withdraw EPF Amount?
The government of India has taken into account the damage and effect that Coronavirus has on the Indian economy as well as the global economy.
In this period of the pandemic, it may happen that you run out of cash or funds for your daily expenses.
It can be challenging to handle the finances or monetary stability in this time of crisis. Taking note of the same, the government has loosened rules for EPF contributions made by the employer and employee of every organization.
As we all know the Employees Provident Fund (EPF) was introduced by the government to make provisions and save money for your post-retirement life. However, now is the time when you desperately need those funds to get through the worst nightmare of all.
Also Read: What is Provident Fund and How is it Calculated?
The main motive or objective that Employee’ ‘Provident Fund Organization has introduced this relief is to benefit the 4.3 crore employees and the 6.5 lakh employers that provide for these employees.
This will allow them to tide over the bad liquidity crisis to a certain extent as much as possible. It is like taking the baby steps towards a better future.
The said changes were made by the Central Government on the 12th of May 2020 through an official notification published in the Gazette of India. The notification is available on the official EPFO website under the COVID 19 tab.
Now let us dive into the changes that are made by the government under the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
Also Read: How to Withdraw PF Online
- As announced by the Central Government under the Amtmanirbhar Bharat Package, the rates of EPF contribution made by both the employer and the employee have been reduced to 10% up with the situation.
- However, this reduced rate of EPF contribution is made for wage months of May, June, and July of 2020 only.
- In the Frequently Asked Questions (FAQ) released by EPFO, it is clearly stated that it is applicable to all establishments except the Central and State organization or enterprises under or owned by Central or State Government. Furthermore, it is also not applicable to the organizations that are already enjoying reduced contribution rates.
- Moreover, the modified rates are applicable to the establishment who register under EPF during the said period of May, June, And July 2020 as well.
- However, employers and employees that wish to contribute at a higher rate of 10%, have the right to do so but cannot exceed the maximum limit of INR 15,000.
Also Read: Latest NSC Interest Rates
To be eligible for EPF withdrawal during the Coronavirus pandemic, an individual has to satisfy 3 requirements as follows:
- The employee who wants to withdraw from the EPF balance should have activated the Universal Account Number (UAN).
- The Aadhar card must be linked with the UAN that must be verified.
- The UAN and the bank account of the employee with IFSC must be seeded with each other.
Withdrawal Rules Of EPF
Any person who wishes to withdraw from the EPF balance must adhere to the limits prescribed by the government.
Every individual can withdraw 3 months of the basic and the dearness allowance in the salary or 75% of the credit balance in the EPF account whichever is less.
Moreover, one must note down that the withdrawn money remains non-refundable.
Also Read: Latest SBI FD Rates 2020
Let us understand this with an example. Suppose you have a credit balance of INR 4,00,000 in your EPF account and your basic salary plus dearness allowance is INR 40,000.
Then your 3 months basic and Dearness Allowance comes to INR 90,000 (30,000 X 3) and 75% of the balance comes to INR 3,00,000. Therefore the withdrawal limit for such an individual will amount to INR 90,000 as it is less than INR 3,00,000.
The withdrawn amount cannot be refunded back into the account and hence remains non-refundable.
Frequently Asked Questions About New EPF Rules Under Amtmanirbhar Bharat Package
Under the Atmanirbhar Bharat Package, the contribution to the EPF account has been reduced to 10% from a rate of 12% earlier.
Who can withdraw advance from the EPF account?
Any employee who has fulfilled the eligibility for withdrawal of EPF, which states that he has UAN verified number and an EPF bank Account seeded with each other, he/she can withdraw the balance.
Is the reduced rate of EPF contribution applicable for the whole financial year of 2020-21?
No, the reduced EPF contribution rate is not applicable to the whole financial year of 2020-21. However, it is applicable only for the months of May, June, and July of 2020 as per circular released by Govt in April 2020.
Every individual can withdraw an amount equal to 3 months of the basic and the dearness allowance or 75% of the credit balance in the EPF account whichever is less.
Yes, any employer and employee who wishes to contribute more than the reduced rate of 10% can do so willingly.
Can the establishments registered in EPFO during May, June, and July 2020 apply for the new EPF Corona rules?
Yes, any establishment that registers itself under the EPF & MP Act, 1952 during the said months can avail benefits of the new rules.