Winning Bizness Desk

Mumbai. In a significant move aimed at simplifying the Employees’ Provident Fund (EPF) claim process, the Employees’ Provident Fund Organisation (EPFO) has removed the requirement of uploading a cancelled cheque or bank passbook image while withdrawing money from a Provident Fund (PF) account. In another crucial step, employer approval is no longer necessary for bank account seeding in the Universal Account Number (UAN) system.

Bank Seeding Now Through Aadhaar OTP

The Ministry of Labour and Employment confirmed the new procedures through an official announcement by Union Labour Minister Mansukh Mandaviya. Under the revised system, EPF members can now verify their bank account number and IFSC code directly using Aadhaar-based OTP verification. This eliminates delays caused by employer dependencies. Previously, requests for bank seeding required employer approval, which often led to an average delay of 13 days and left nearly 15 lakh requests pending.

Claim Settlement Trials Successful, Now Rolled Out Nationwide

The trial phase for removing document upload requirements began on May 28, 2024, as a pilot project. Around 1.7 crore EPFO members benefited during the testing phase. Following its success, the revised claim settlement process has now been implemented nationwide. The aim is to reduce paperwork and streamline the withdrawal mechanism, making it more accessible for India’s formal workforce.

Withdrawals via UPI and ATM to Begin Soon

In an earlier announcement, the labour ministry had stated that EPFO members will soon be allowed to withdraw funds up to ₹1 lakh via UPI and ATM. This facility is expected to launch by the end of May or early June 2025. EPFO plans to issue special withdrawal cards similar to debit cards for ATM use. Additionally, members will be able to check their PF balance and initiate fund transfers through UPI, improving ease of access.

Digital Infrastructure Upgraded, Settlement Timeline Reduced

The EPFO has integrated over 120 databases to strengthen its digital infrastructure. As a result, the claim processing period has been cut down to just three days. At present, 95% of all claims are being settled automatically. The reforms are part of the government’s larger effort to offer financial flexibility to workers and ensure quick access to their retirement savings in times of need.

Withdrawal Rules and Tax Implications Remain Unchanged

The rules regarding PF withdrawals due to job loss or employment changes continue as before. Employees can withdraw 75% of their PF balance after one month of unemployment and the remaining 25% after two months. As for taxation, PF withdrawals are tax-free if the employee has completed five years of service, even if this duration spans across multiple companies. Withdrawals made before five years and exceeding ₹50,000 attract 10% TDS, or 30% if the employee fails to provide a PAN card. However, no TDS is deducted if Form 15G or 15H is submitted.