The on-going drama over EPF withdrawal has made the government rollback all the changes it had introduced to how things were before Budget 2016. For you, it means that you can withdraw your PF within 60 days or two months of being unemployed. Moreover, if the full corpus is withdrawn after five years of the activation of the PF account then the withdrawal won’t be taxed. There will also be no tax on the EPF at the time of withdrawal, something which was mooted in the Budget and rolled back within days of the announcement.

The EPF Edge

• Withdraw your PF within 60 days or two months of being unemployed
• No tax on withdrawal of full corpus after five years of the activation of
• the PF account
• No tax on the EPF at the time of withdrawal on retirement
• EPF is handy to tide over a situation between jobs
• EPF provides buffer to build a house or in case of medical emergency

It took two days of rioting by garment workers in Bengaluru for the government to see light of the situation. Labour minister Bandaru Dattatreya was forced to state; “We’re cancelling the notification of February 10, 2016. The old system will continue.” The move by the government was brazen and hasty without realising the number of people being impacted and the scale of trouble the move will be causing them. The EPF over the years has been the only form or any social security for crores of salaried people and for many, the only form of any meaningful savings.

The tinkering with EPF was more to do with shifting the scheme from guaranteed returns to a market-linked option under the National Pension System (NPS). The whole thing was a joke, going by the Finance Minister mentioning the move towards a pensionable society. The compulsory annuity on EPF withdrawal not only takes away choice from the member, it also forces them to accept a format that may not favourably work for them. The panic has already resulted in several people exiting the EPF, and if you can manage your future retirement on your own, on possible performance; the NPS is a good choice. If you are risk averse—stick to your EPF, it looks unlikely that the government will pull the plug off this instrument with its existing benefits.