This GMS Flash Alert reports on the significance of the withdrawal of a previously-issued notification that had placed restrictions on early withdrawal of full accumulated balances in the Provident Fund (PF) accounts of employees.
Pursuant to representations from various stakeholders, the government of India has decided to withdraw a previously-issued notification that had placed restrictions on early withdrawal of full accumulated balances in the Provident Fund (PF) accounts of employees.
The Employees’ Provident Fund Organisation (EPFO) issued a circular1 dated 19 April 2016, that rescinded the restrictions on withdrawals that had been introduced by the earlier notification2.
Because the earlier notification has been withdrawn, an employee who is not an International Worker3 can make an application to withdraw his or her full accumulated PF balance, where the employee ceases to be employed and is not re-employed with any other establishment which is covered under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 (EPF Act) for a continuous period of at least two months.
International Workers who are covered under an effective Social Security Agreement (SSA) continue to be entitled to a full refund of PF accumulations at the time of cessation of their employment in Indian establishments covered under the EPF Act. However, International Workers from countries with which India does not have an effective SSA are not eligible to withdraw their full PF accumulations before the age of 58.
The EPFO issued a notification dated 10 February 2016, to amend the Employees’ Provident Funds Scheme, 1952 (EPFS) relating to withdrawals of PF accumulations. (For prior coverage, see “The Government of India Issues a Notification for Changing the Provisions of Provident Fund Withdrawals under the Employees’ Provident Funds Scheme, 1952,” in Tax Flash News (25 February 2016), a publication of the KPMG International member firm in India.)
The notification placed restrictions on early withdrawals of full accumulated balances in the PF accounts of employees.
This article is excerpted with permission from “Government of India Withdraws the Restrictions on Early Provident Fund Withdrawals,” in Tax News Flash (21 April 2016), a publication of the KPMG International member firm in India.
1 To see a .pdf of the EPFO letter No.S-35012/5/2015-SS.II dated 19 April 2016, click here.
2 Notification no. G.S.R. 158(E), dated 10 February 2016 [F.No. S-5012/5/2015-SS-II]
3 For social security/PF purposes, a foreign national working in India is an International Worker as per the EPF Act.
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