The Employee Provident Fund scheme is a retirement savings initiative to assist salaried employees in their retirement years. Mandatory enrolment is applicable to every employee earning a monthly salary of less than Rs. 15,000. Within the framework of the EPF registration, both the employer and the employee contribute monthly to fortify the employee’s retirement fund.
Upon resigning from employment, individuals confront the choice of withdrawing their PF balance or transferring it to their new employer. In this blog, we see the PF withdrawal rules after resignation 2023.
Exploring PF Withdrawal Options Post Resignation
Before going into the PF withdrawal rules after resignation 2023, let us explore the options of withdrawal post resignation. The options of PF withdrawal post registration are:
Option 1: Full PF Withdrawal
When an employee resigns from their position, they have the choice of withdrawing the entire PF amount. This option is applicable to individuals who have not been employed for more than five years.
Option 2: Transfer of PF Balance to a New Employer
Another alternative for employees post-resignation is the transfer of their PF balance to a new employer. This option becomes available to individuals who have been employed for more than five years and have secured a new position with an employer registered with the EPFO.
Option 3: Maintaining an Active PF Account
Employees with a tenure exceeding five years also have the option to keep their PF account active even after resigning. This choice is viable for those who do not have a new employer registered with the EPFO.
Withdrawal Rules After Resignation 2023 Based on Employment Tenure
The PF withdrawal rules after resignation 2023 based on employment tenure are:
1. Less than 5 Years of Service:
The PF withdrawal rules after resignation 2023 for such employees with a tenure of less than five years are entitled to withdraw their entire PF balance after resignation. The process involves completing Form 19 and submitting it, along with the necessary documents, to the EPFO organisation.
2. Between 5 and 10 Years of Service:
As per the PF withdrawal rules after resignation 2023, for employees with a service duration exceeding five years but less than ten years, the withdrawal of the entire PF balance is an option after resignation. However, choosing this withdrawal incurs tax deductions according to the prevailing tax rules. Alternatively, the employee can opt to transfer the PF balance to a new employer or keep the PF account active.
3. More than 10 Years of Service:
As per PF withdrawal rules after resignation 2023, employees with a service tenure surpassing ten years have the option to withdraw their entire PF balance after resignation. Similar to the previous category, choosing this withdrawal incurs tax deductions. Alternatively, the employee can transfer the PF balance to a new employer, maintain an active PF account, and additionally, become eligible to receive a monthly pension under the EPS scheme.
Hence, the PF withdrawal rules after resignation 2023 are contingent upon the length of an employee’s service, providing different options and considerations for individuals at various stages of their careers.
Understanding Tax Implications of PF Withdrawal Post-Resignation
After seeing the PF withdrawal rules after resignation 2023, let us now understand the tax implications of PF withdrawal:
1. Taxation Rules for Less than 5 Years of Service:
If an employee has a service tenure of less than five years, the PF withdrawal after resignation will not be subjected to tax deductions. This provides a straightforward tax treatment for individuals with shorter employment durations.
2. Taxation Rules for More than 5 Years of Service:
For employees with a service duration exceeding five years, the PF withdrawal is subject to tax implications. The tax deduction at source (TDS) varies based on whether the employee has completed more or less than five years of service:
a. Less than 5 Years of Service:
- ·TDS at the rate of 10% is applicable.
b. More than 5 Years of Service:
- TDS at the rate of 10% if PAN details are submitted at the time of withdrawal.
- TDS at the rate of 34.608% if PAN details are not submitted.
It’s important to emphasise that the TDS is not the final tax liability for the employee. The employee’s ultimate tax liability will be determined based on their income tax slab for the financial year. If the TDS deducted exceeds the actual tax liability, the employee can claim a refund when filing their income tax returns.
So, the tax implications of PF withdrawal after resignation are contingent upon the duration of an employee’s service, introducing varying rates and considerations based on the length of employment.
Process of Applying for PF Withdrawal Online
The process of PF withdrawal online involves these steps:
Step 1: Log In to EPFO Website
Visit the EPFO website and log in using your Universal Account Number and password.
Step 2: Access Online Services
Click on the ‘Online Services’ tab on the dashboard.
Step 3: Choose Claim Submission
From the drop-down menu under ‘Online Services,’ select ‘Claim (Form-31, 19 & 10C).’
Step 4: Verify Personal and Bank Details
Verify and update your personal details and ensure that your bank account information is accurate.
Step 5: Provide Employment Details
Fill in the details related to your previous employer and specify the reason for leaving the job.
Step 6: Select Withdrawal Form
Choose ‘Form 19’ from the available claim options. Enter the desired withdrawal amount.
Step 7: Submission and Confirmation
Submit the online application. After submission, await confirmation, and the EPFO will process your request.
Step 8: Amount Credited to Bank Account
Once approved, the withdrawn amount will be credited to your registered bank account.
Final Thoughts
The PF withdrawal rules after resignation 2023 offer distinct options based on employment tenure. For employees with less than five years of service, complete withdrawal is permissible. Individuals with service durations between five and ten years face tax implications upon withdrawal, with options to transfer or maintain an active PF account. Those exceeding ten years of service can withdraw with additional eligibility for a monthly pension. Tax deductions apply, and TDS rates vary, emphasising the importance of adhering to rules for an efficient withdrawal process. The online application process through the EPFO further simplifies and expedites PF withdrawal, reflecting the commitment to enhancing employee convenience.
