CA Unnamalai L
Quick Summary
Are you considering withdrawal from EPF?
Read further to understand the withdrawal limit, tax consequences and likely impact on retirement corpus.
1. Can I withdraw money from my EPF Account now?
Yes. If you are facing financial problems due to the COVID-19 lock-down
2. How much can I withdraw?
- 3 months Basic Salary +DA or 75% of credit balance in EPF whichever is lower.
- No tax implication to subscribers on withdrawals.
3. Should I reinvest the amount withdrawn post lock-down?
Amount withdrawn due to the pandemic outbreak is 'non- refundable'. Hence, you are not required to refund the withdrawn amount back into your EPF.
4. Is it a wise decision to withdraw from EPF Now?
- EPF is a long term saving. Withdrawing will deprive power of compounding. EPF offers the highest tax-free return compared to all other fixed-income instruments.
- Even a small withdrawal midway can impact the retirement corpus drastically.
- Assuming EPF continues to give ROI 8.5%, your impact on retirement corpus :
|
Amount Withdrawn now in Rs. |
No. of years to retire |
Retirement corpus will reduce by Rs. |
|
2,00,000 |
30 |
23,11,650 |
|
2,00,000 |
20 |
10,22,409 |
|
2,00,000 |
10 |
4,52,197 |
Choose to withdraw EPF only if all options are exhausted!
FAQ :
Yes, you can withdraw money from your EPF account if you are facing financial difficulties caused by the COVID-19 lockdown.
You can withdraw the lower of either three months' Basic Salary plus Dearness Allowance (DA), or 75% of the credit balance in your EPF account.
No, there are no tax implications for subscribers on withdrawals made for COVID-19 relief.
No, the amount withdrawn due to the pandemic outbreak is non-refundable, so you are not required to refund it back into your EPF.
It is generally not advisable to withdraw from EPF as it is a long-term saving instrument. Withdrawing can significantly impact your retirement corpus due to the loss of compounding power, and EPF offers high tax-free returns compared to other fixed-income options. Consider withdrawal only if all other options are exhausted.
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