Withdraw PF Money Directly from ATMs! EPFO 3.0 to Offer New Benefits by June 2025

The Central Government is planning significant reforms in the Employees’ Provident Fund Organization (EPFO). According to sources, as per the draft for EPFO 3.0, the government is considering allowing employees to withdraw PF funds directly from ATMs.

New ATM Withdrawal Facility

This facility is expected to roll out by June next year, but employees will only be able to withdraw a fixed amount. This means employees can access funds for emergencies while ensuring sufficient savings remain for retirement.

Increase in Employee Contribution to EPF

There are discussions about increasing the current 12% contribution by employees to the EPF. Currently, employees contribute 12% of their basic salary, dearness allowance, and retaining allowance, of which 8.33% goes to the pension fund and 3.67% to the EPF.

Option to Enhance Pension Contributions

The Central Government has also proposed changes to the Pension Scheme (EPS-95). Under the new proposal, employees can increase their current 8.33% contribution. The employer’s contribution, however, will remain unchanged and must align with the employee’s salary. Employees will also have the flexibility to top up their contributions and the pension fund anytime. Additionally, the portal will be made more interactive to educate employees about PF facilities.

EPFO Evolution: From Manual to Digital

• EPFO 1.0: Accounts were maintained manually. Applications and withdrawals were processed through paperwork.
• EPFO 2.0: The system became digital with an online portal, and employees were provided with a Universal Account Number (UAN).

Withdrawal Rules for Unemployment Period

If an employee loses their job, they can withdraw 75% of their PF savings one month after leaving. The remaining 25% can be withdrawn two months after leaving the job, providing financial support during unemployment.

PF Withdrawal and Taxation Rules

• If an employee completes five years of service and withdraws PF, the amount is tax-free. The five-year service period can include multiple companies and does not necessarily have to be with a single employer.
• If an employee withdraws more than ₹50,000 from the PF account before completing five years of service, a 10% TDS (Tax Deducted at Source) is applicable. If the employee does not have a PAN card, the TDS rate increases to 30%. However, no TDS is deducted if the employee submits Form 15G/15H.