Understanding PF Withdrawal: Tax Implications and UAN Continuity After Unemployment

There is this provision that if one is without a job for 2 months, they can withdraw their PF. Can anyone give me info on the following:

1. Is the amount we get taxable?
2. What if we join a company post 4 months, does the same UAN number apply?
3. Do the benefits we incur, like showing continuity of service with PF for more than 5 years, get reset?

Thanks for the support.

Hi,

Please visit the site below to find all the necessary information:

New EPF Withdrawal Forms - Withdraw without employer signature - BasuNivesh

Link to BasuNivesh Article

Thank you.

Understanding PF Withdrawal and Tax Implications

If you want to withdraw the PF, you should submit the claim form. This claim form can be submitted after waiting for two months after leaving the organization. After leaving the first organization, if you get employed in another organization to which PF applies, then you cannot go for the withdrawal benefit. However, if you get employment in an organization to which the PF is not applicable (for example, due to a smaller number of employees), then you can claim the withdrawal benefit.

Tax Implications of PF Withdrawal

Now, coming to the next part of the query, the PF amount withdrawn after 5 years of service will be tax-free. If you withdraw PF before completing 5 years of membership, it will be taxable at the rate of 34.608%, assuming the claimant's income from all other sources is at the maximum of the IT slab. Therefore, to show that the member withdrawing the PF does not fall under income tax, he has to submit Form 15G/15H along with the PF withdrawal forms to the EPFO. Form 15G is for persons below the age of 60 years, and Form 15H is meant for senior citizens. However, no tax would be deducted at source if the total amount from the PF is Rs 50,000 or less.

If you transfer the PF to a new PF account created at the new place of employment, no tax would be deducted.

Impact on UAN and Service Continuity

If you have closed the PF by claiming the withdrawal benefit, the UAN will cease to exist, and in such cases, upon joining a new establishment, you will be allotted a new UAN.

Withdrawal of PF will certainly put an end to your service, and with each entry to a new establishment, the service will reset. However, if you do not withdraw the Pension Fund at each job change or if you opt for a "scheme certificate" in lieu of withdrawal benefit whenever you shift a job, your continuity of service with regard to the pension will be maintained.

It is not mandatory that when you withdraw PF, you should withdraw both the Provident Fund as well as the Pension Fund.

Regards, Madhu.T.K

In addition to the points mentioned above, I request further clarity. As mentioned by respected Madhu T.K., "At the same time, if you get employment but in an organization to which the PF is not applicable (say, due to fewer employees), then also you can claim withdrawal benefit." If my basic salary is above 15,000 in the new organization, do I not fall under the PF category, and can I withdraw the PF? Or do I need to ensure that I remain jobless for 2 months and then join the new organization so that I can legally claim the PF amount without hurting my conscience? Please confirm or guide if possible.

PF Eligibility and Withdrawal Conditions

If in the new establishment, which is covered by PF, your PF qualifying salary (not simply the Basic alone but what all would qualify for PF contribution) is more than Rs 15,000 or such other higher amount the PF Organization may fix (because there is a possibility that the PF qualifying salary will be increased from Rs 15,000 to Rs 25,000 as this will bring more employees under PF cover and the government can receive a substantial amount in addition to the corpus fund already available and utilize it for its extravagance without making any effort to bring back Vijay Mallya!), then you should be covered because you are an existing member, and for an existing member, the salary is not a matter. An existing member means a new employee who was a member of PF but has not withdrawn the PF on leaving the previous employment.

Therefore, if you have left company A and have not withdrawn your PF accumulations upon leaving due to any reason, perhaps it has been less than 2 months since you left that company, and you join company B (covered by PF), but at the time of joining company B, your PF qualifying salary is more than Rs 15,000, you are an existing member, and you should continue with PF using the old UAN with the present company, i.e., company B.

If you want to withdraw your PF accumulations, you should certainly be unemployed for at least 2 months.

Regards, Madhu.T.K