Partial withdrawals of fund can be done without being taxed

The Finance Ministry is now reconsidering the Budget provision to impose TDS on premature provident fund (PF) withdrawals of Rs 30,000 or more. This means breaking your EPF corpus before completion of five years of service will be taxable for bigger amounts. You are allowed to withdraw only if it has been more than two months that you are out of work and you are still unemployed.

However, there are four situations that allow you withdraw from your EPF account while on job without getting taxed.

These are partial withdrawals which are usually computed on the basis of your monthly salary or contribution made so far.

EDUCATION AND MARRIAGE

You are eligible to withdraw for marriage and education of your siblings, children and yourself if you have completed seven years in service. This reason for withdrawal can be stated three times in your working life to take out 50% of the contribution made by you till the date of application.

`Years of service' is the total number of years you have worked. EPF is a centralised scheme under the Ministry of Labour and Employment and no matter how many job switches you make, only the aggregate experience need match the criteria. This, provided you have transferred your old EPF accounts to the current one. Also, remember, the rule says `employees' contribution' only .

MEDICAL EMERGENCIES

The EPFO allows advance withdrawals whenever you need funds for medical treatment for yourself or a family member--spouse, children or dependent parents. No minimum years of service is required however minimum one month of hospitalisation is a must.

You can withdraw your full contribution or six-times your basic monthly wage, whichever is lesser. Do not con fuse the term `wage' with your salary or monthly take home. By basic wage the EPFO means your basic salary plus any dearness allowance.

The advance can be taken for all major surgical operations or for treatment of critical illness. You'll have to submit proof of hospitalization along with the leave certificate, in case the funds are for your own treatment.

FOR HOUSE, PLOT OR HOME LOAN

You can withdraw up to 36-times your basic wage once in your working life from the EPF account to fund the construction, purchase or repayment of a housing loan. You should have completed 5 years of service in case you are purchasing or building the house. If you are prepaying a debt, you should have completed at least 10 years of service. For buying land, you are allowed to withdraw only 24 times your wage and should have completed 5 working years.

REFURBISHING YOUR HOUSE

The EPFO will allow you once to withdraw a maximum of 12-times your monthly basic pay for repairs and renovation of your home. You should have been contributing to the PF account for at least 5 years in case you want the funds for renovation. For repair, you should have completed 10 years of membership. The property should be in your or your spouse's name or jointly held. You'll have to submit a copy of the completion certificate at the EPFO office.

Along with the proofs of special circumstances, you'll have to fill out Form 31 for these advances.

Note that only after your employer verifies your application will the PF office process it.