EPF withdrawal Rule: The central government is considering making major changes in the rules of withdrawal from the EPF account. Now EPF subscribers can be allowed to withdraw their entire deposit or some part once every 10 years. Right now the employed employees have to wait till retirement to withdraw the full amount.
Full withdrawal in every decade?
Two senior government officials told Moneycontrol that the central government is seriously considering the proposal of EPFO (Employees’ Provident Fund Organization). Under this proposal, members will be able to withdraw money from their account every 10 years.
According to an official, “Every member’s deposit capital increases in every decade. They should have the freedom to decide where and how they want to use it.”
What is the rule at the moment
Currently, the entire withdrawal from the EPF is possible in only two situations- when the member retires (usually at the age of 58), or when he has been unemployed for more than two months. Apart from this, partial withdrawal from EPF is allowed in certain circumstances.
Support to young employees?
If this proposal applies, young members will be able to withdraw their entire EPF amount even at the age of 30 or 40 years. However, an official also indicated that the government can fix the withdrawal limit of up to 60% and not the entire amount. This option is currently under consideration.
What is the purpose of the government?
According to an official, “In the last one and a half years, most of the policy relaxation related to EPF has been brought with the aim that members can use their money in a more flexible and convenient manner. The 10-year withdrawal proposal is also part of this thinking.”
Expert’s opinion: profit or danger?
However, not all experts fully agree with this proposal. They believe that even though this scheme gives relief short-term, it can weaken the basic spirit of EPF. According to the expert, the aim of EPF is to create a safe fund for retirement, not to meet short -term needs.
Akshay Jain, partner in Saraf and Partners, says, “The terms and conditions of any such proposal should be made very thoughtfully, so that short-term financial needs do not be heavy on long-term security.”
What will be the benefit?
Rohitashv Sinha, partner at King Stubb & Kasiva, believes that the high access to PF can increase the liquidity in the market, especially the real estate sector. This will benefit both the economy and the employee.
However, Sinha also added that frequent withdrawal exemption may reduce savings for the future. Especially, when the money is over in times of need.
IT system can create bottlenecks
Experts have also warned that EPFO will have to strengthen its IT infrastructure before implementing such changes. The existing system is not capable of repeated withdrawal requests and processing. This may increase the risk of disturbances and fraud.
Recent change in withdrawal
Currently, partial withdrawal from EPF accounts is only for certain special needs. Such as housing purchase, treatment, education or marriage. But recently the rules have been relaxed.
From July 2025, members can now remove up to 90% of their EPF funds to buy land or build a house. Earlier this facility was available only to those who have contributed to the account for five consecutive years, but now this limit has been reduced to three years.
Auto-settlement limit increased
The EPFO issued a notification on June 24, stating that the limit of auto-settlement has been increased from ₹ 1 lakh to ₹ 5 lakh for the advance claim without additional approval. The aim is that members can get funds early in an emergency.
EPF is a major retirement saving scheme of India, which EPFO is overseen. This contributes a part of both employees and employers. Interest is also received on this deposit. Its purpose is to ensure financial security after retirement.
If the government implements this proposal, it can prove to be the biggest infrastructure change in the history of EPF.
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