The Employees’ Provident Fund Organisation (EPFO) has had a paper-based system of processes for a considerable time. Recently though, it has adopted a progressive approach, and has transitioned to a modern, digital and paperless system. Some of these changes include online claim process, doing away with employer attestation, e-nomination, and e-KYC, among others
Under certain circumstances, a member is entitled to withdraw his/her accumulations in the provident fund account, either partially by way of an advance withdrawal, or in its entirety by way of a complete withdrawal.
Advance withdrawal is permitted in the following circumstances: wedding (self, children, sister or brother), post-secondary education of children, purchase of land and/or purchase or construction of a house, home loan repayment, house renovation, illness, and COVID-19 expenses.Advance withdrawals have served to be beneficial for numerous members who were facing financial crisis as a result of the COVID-19 outbreak and resultant pay cuts.
The full amount of provident fund accumulations can be withdrawn in the event of (a) retirement of the employee from service after attaining the age of 57 years or within one year before his actual retirement, or, superannuation, whichever is later; (b) the employee, after attaining the age of 55 years, invests in Varishtha Pension Bima Yojana; and (c) completion of two months after the member ceases to be an employee of an establishment/factory to which the Employees’ Provident Fund (EPF) Act applies.
For international workers, the accumulated provident fund balance can be withdrawn (a) at the time of retirement on or after 58 years of age; (b) retirement on account of permanent and total incapacity for work due to bodily or mental infirmity; (c) immediately before migration from India for permanent settlement abroad or for taking employment abroad; and (d) termination of service in the case of mass or individual retrenchment or voluntary scheme of retirement. It is also pertinent to note that, by a 2012 notification, expatriates working in India (international workers) who are covered under a Social Security Agreement (SSA) between India and any other country are allowed to withdraw their accumulated provident fund balance under the EPF Scheme on cessation of employment. Prior to this, an international worker was allowed to apply for the withdrawal of provident fund accumulations only on retirement from service at any time after the attainment of 58 years of age (except under specified conditions), or in accordance with the SSA applicable to such employee, if any.
Once the pre-conditions of activating UAN, Aadhar seeding, KYC, and e-nomination are complete, the members can withdraw their provident fund online, subject to meeting the criteria stated above. The process of provident fund withdrawal is as follows:
Step 1. Log in to the e-Sewa portal using your UAN, password, and captcha.
Step 2. Click on "Online Services"->"Claim"
Step 3: Enter your bank account information.
Step 4. Accept the terms and conditions.
Step 5. Click on "Proceed for Online Claim."
Step 6. Select a reason for withdrawal from the dropdown box.
Step 7. Upload the requisite details and documents.
Step 8. Again, accept the terms and conditions.
Step 9. Request for OTP.
Step 10. Enter the OTP and the claim application will be submitted.
Once the application is verified by the EPFO, the amount will be credited to the member’s bank account. This process typically takes 15-20 days to be completed.
If the member is taking up employment in another organisation after leaving a job, he or she has the option of transferring the existing provident fund account to the new employer. In order to initiate the transfer of provident fund, the members are required to fill out Form 11, which is a declaration form that enables the automatic transfer of provident fund from the previous provident fund account to the new provident fund account. The new employer would then be required to fill in the information provided by the employee on Form 11 on the employer’s portal at the official portal of the EPFO. The data so submitted will be validated with the information available against the UAN, and thereafter, the transfer of provident fund will take place.
In a move towards complete digitisation, EPFO has made Aadhaar seeding of UAN mandatory from April 30, 2021 for provident fund withdrawal in light of Section 142 of the Social Security Code, 2020 being notified on May 3, 2021. However, on account of the challenges faced in the second wave of COVID-19, multiple extensions were allowed for the completion of the Aadhaar seeding process. The EPFO offered online Know Your Customer (KYC) services for Aadhaar seeding of UANs to make the process easier. On the basis of the information available with the EPFO, as of September 1, 2021, 94 per cent of the subscribers had Aadhaar seeding. For the remaining subscribers, the deadline of December 31, 2021 was given. In addition to the Aadhaar seeding, the members are also required to upload their PAN and bank account details on the portal. Once these details are approved by the employer and the KYC is thereby verified, the KYC process is completed.
In addition to the above requirement of Aadhaar seeding, EPFO has recently made e-nomination mandatory to ensure simpler withdrawal by family members in the event of the death of the PF account holder. The last date for e-nomination is March 31, 2022. Failure to file an e-nomination may result in difficulties with future withdrawals and access to certain provident fund services.
With the EPFO services now becoming online, the process of withdrawal of provident fund by the members has also become quite seamless, and it is expected to provide much relief to the members, as they will no longer need to stand in long queues to have their provident fund claims processed. Another benefit that Aadhaar seeding offers is that attestation from the employer is no longer required for the withdrawal process. However, for international workers without Aadhaar seeding, employer approval is still required.
Pooja Ramchandani is partner and Suryansh Gupta is associate at Shardul Amarchand Mangaldas and Co.
(Disclaimer: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)