No Tax on EPF Withdrawals Amid Covid-19

Money deducted from EPF usually incurs tax until the expiration of five years of continuous operation. You will deduct up to three months 'compensation (basic pay and loan allowance) or 75 percent of your account's overall EPF balance

by Hari Aditya

Updated: Apr 12, 2020 12:45 IST

Tags: India Corona
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No Tax on PF and Pension Withdrawals

Considering the financial burden that many salaried individuals face as a consequence of the covid-19 pandemic, on 20 March 2020, the government authorized special provision for withdrawal from the Provident Fund of Employees (EPF) account. After the declaration, the Provident Fund association of workers (EPFO) has received approximately 1.37 lakh claims disbursing a sum of approximately 0.8 billion. The money remittances have also begun to take effect. Usually, funds deducted from EPF account prior to the expiration of five years of continuous operation incur tax, except under such circumstances such as a medical emergency or when the employee or contractor ends up their company or for some such cause outside the employer's influence. Nevertheless, even in the event that you plan to remove funds from EPF account owing to the covid-19 pandemic, that deduction would be tax-free. That is how much you should remove the money, and how many.

How much you can withdraw?

You will deduct up to three months 'compensation (basic pay and dearness allowance) or 75 percent of your account's total EPF balance, whichever is lower. For eg, if your EPF balance is lakh and your minimum pay and dearness benefit is 60,000 a month, you can withdraw less than 90,000 (3-month salary) or 0.25 lakh (75% of EPF balance), which means you can withdraw up to 90,000.

How to Make a Withdrawal?

If you want to remove funds from your EPF account, sign in first using your Universal Account Number (UAN) and password to your EPF account. Upon logging in, go to the Online Services tab and click on "Claim (Form-31,19,10C & IOD)." Only if you have changed the Aadhaar number with your EPF account will you be allowed to move further and make a claim. When the Aadhaar is transferred to an EPF account, you will be required to enter four digits of your bank account to validate it. Click on the "Proceed For Digital Request" option after verification of the bank account. Next, you pick the appropriate withdrawal-type i.e. Drop-down list type 31. If you remove funds due to financial difficulty due to covid-19, pick the intention from the drop-down as "Pandemic Outbreak (COVID 19)." You are now expected to enter the sum you want to remove and upload a scanned test copy and enter your username. To move further, click on "Get Aadhaar OTP," enter the OTP obtained on Aadhaar connected mobile and send the document. EPFO is claiming to settle the request in the three working days. Protection Status