The newly notified Employees' Provident Fund (EPF) Scheme, 2026 introduces significant changes to EPF withdrawal rules effective June 29, 2026. EPF members now have access to a substantially larger portion of their provident fund savings for housing purposes under the simplified withdrawal framework. According to reports from Business Standard, eligible members can withdraw up to 75% of their EPF balance for buying, constructing, or repairing a home, with the calculation no longer restricted to employee contributions alone. The eligible balance now includes the employee's contribution, employer's contribution, and interest credited to the account, subject to applicable rules. However, the most significant change is the ₹5 lakh auto-settlement limit (up from ₹1 lakh), mandatory retention of 25% of eligible balance for partial withdrawals, and enhanced tax implications under Section 192A.
Under the new framework, eligible members can withdraw up to ₹7.5 lakh from a ₹10 lakh EPF balance, with at least ₹2.5 lakh remaining in the account. As reported by Business Standard, members must have completed 12 months of EPF membership to use the simplified withdrawal facility. The minimum balance requirement applies to both employee and employer contributions - for example, an account with an eligible balance of ₹1 lakh must retain ₹25,000, leaving ₹75,000 available for withdrawal. Withdrawals below ₹50,000 are TDS-free regardless of service length, but amounts above this threshold face 10% TDS with PAN and approximately 34.6% without PAN. The most significant change is the 25% minimum balance retention rule - on a ₹4 lakh balance, members can withdraw only ₹3 lakh, with the remaining ₹1 lakh mandatory retention. If an employee withdraws the entire eligible EPF corpus through final settlement and subsequently secures another job, the withdrawn amount cannot simply be restored to the earlier PF account.
The tax treatment of EPF withdrawals depends critically on continuous service duration. Under Section 10(12) of the Income Tax Act, zero tax applies to the entire amount, including the employer's contribution, employee's contribution, and interest earned, if the employee has completed five continuous years of service. As per Zee News, five continuous years of service does not imply association with one employer throughout the period - even if employment changes and the account shifts from one establishment to another within five years, it would be considered continuous service. Form 15G provides no tax exemption - it only stops TDS if total income is genuinely below the taxable limit. The most important change is that transferring PF between jobs protects continuous service, while withdrawing it does not. This makes transferring PF on job changes essential for maintaining tax-free withdrawal eligibility. If the accumulated balance is withdrawn before completing five years of continuous eligible service, the proceeds may become taxable under applicable conditions.
Housing-related EPF withdrawals can serve four broad purposes: buying a house, flat, or site; constructing a house; repaying an outstanding home loan; and repairing, renovating, adding to, or improving an existing house or flat. According to Business Standard, the simplified framework brings different partial-withdrawal provisions into a more uniform structure, making the process easier for members to understand and access. The new regulations have expanded the list of permissible reasons for partial withdrawals, with housing-related withdrawals including buying a house or flat, purchasing a plot for construction, building a home, repaying a housing loan and carrying out repairs or improvements. Partial withdrawal of up to 100% of eligible balance is now allowed to cover expenses like illness, education, and marriage, with withdrawals under special circumstances requiring no additional explanation. The Essential Needs category includes medical reasons, education, and marriage, with medical withdrawals allowing up to six months' wages after one year of membership for self or family treatment, education withdrawals up to 10 times for children's education after one year, and marriage withdrawals up to five times after one year for weddings. Housing Needs includes purchase of a house (up to 90% of EPF after 1 year of membership) and home renovation (12 times monthly wages after 1 year of membership) for properties in the member's or spouse's name.
The Employees' Provident Fund Organisation (EPFO) has completed testing for a new facility that will allow subscribers to withdraw their provident fund savings directly into their bank accounts through the Unified Payments Interface (UPI). According to Business Standard, this move is part of a broader push by EPFO to improve service delivery and simplify access to provident fund savings for over seven crore members. The digital payment facility represents a significant step in modernizing EPF withdrawal processes and enhancing member convenience in accessing their retirement savings. An EPF member who becomes unemployed can withdraw up to 75 percent of the available balance, comprising eligible employee and employer contributions along with accumulated interest. The remaining 25 percent can be withdrawn after the member completes the prescribed period of continuous unemployment. Once the eligibility requirements are fulfilled, the member can apply for final settlement of the eligible EPF balance. Online claims for members who have completed full KYC take between three to seven working days, while auto-mode eligible claims take 72 hours, and offline physical claims submitted to EPFO office can take up to 20 working days. Claims are generally approved and settled within seven to 15 working days, with SMS alerts at every stage of the process.
