To tide over the Covid-19 crisis, the Finance Minister has announced that employees who are members of EPF can withdraw 75 per cent of the amount standing to the credit of the employees in their accounts or three months of wages, whichever is lower, as non-refundable advance.

While this is good news, there are some grey areas such as eligibility of members as well as the definition of wages. Given that this has been announced to help provide for contingencies, the earlier the clarity emerges, the better.

Open to interpretation

At the outset, it looks like not all employees who are members of EPF would be eligible for withdrawal.

While as per the latest information available on the EPF website, the entity maintains 19.34 crore accounts (as of 2016-17) and this move is expected to benefit only four crore workers who are registered with the EPF. It is also not clear if this is applicable only for employees earning below ₹15,000, which is the limit for the other EPF-related announcement made, where the government will contribute 24 per cent of their monthly wages into their PF accounts for the next three months. Second, the definition of wages for the purpose of calculating the eligibility amount for partial withdrawal, is also open to interpretation.

Partial withdrawal allowed for other reasons, such as marriage, education, purchase, construction or renovation of house – each has its own withdrawal limit – based on either basic wages and/or dearness allowance (DA) or contribution to EPF.

Given that this latest measure is announced during testing times, will the government relax the definition of wages, to say, the take-home pay of three months? Or will it be limited to only the basic pay or basic pay and DA during this period?

One needs to wait for the amended regulations before knowing how much one is eligible to withdraw.

However, once clarity emerges, the withdrawal process should not be difficult.

If your Aadhaar and bank account details are linked with the UAN (Universal Account Number) provided by the EPFO – an exercise that many employers have already carried out for their employees – you can file the withdrawal request online on your own and get the amount credited to your bank account.

To be able to withdraw from the comfort of your home during this time of lockdown is a big advantage.

Last resort

That said, since EPF is part of your retirement kitty, it is always best you don’t dip into it unless you are desperate. For this reason, experts are of the view that, since this is an interim measure the government should allow employees the option to put back the withdrawn amount when times get better. According to Sandeep Shah, Partner, NA Shah Associates LLP, private PF trusts allow this option to re-credit based on under certain conditions.

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