EPF advance is useful for COVID-19 treatment

April 24, 2021 Finance Talk Valli Sarvani No comments

As the treatment for COVID-19 has become expensive, patients are exploring various ways to acquire funds for the treatment. Though a few patients have health insurance, many private hospitals do not accept this insurance. They are demanding cash while admitting to a hospital. In this context, EPF advance can rescue them.

Here are some important things to know about EPF advance:

Employees can obtain up to three months’ salary plus dearness allowance or 75 per cent of the EPF account balance, whichever is lower as advance amount.
For instance, if you have a basic salary of ₹25,000 per month and your EPF account has ₹90,000, then you can get an advance from your EPF account as mentioned below:
₹75,000, that is, the total basic salary of three months.
75% of ₹90,000 (your EPF account balance) is ₹67,500.
You can get a lower amount of the above two as an advance. In the above case, 75% of your EPF is lower, so you can get ₹67,500 as an advance from your EPF account.
The good thing is that employees need not deposit the advance amount into their EPF account again.
To withdraw money from your EPF account, you should have a Universal Account Number (UAN). You must link your Aadhaar number, PAN and bank account with your UAN.
If you want to withdraw money, you can submit a withdrawal application either online or offline.
Since the advance amount is intended for COVID-19 treatment and to meet the financial needs of the EPF account holders, the EPFO clarifies that there is no income tax liability on this amount.
Normally, if you withdraw money from the EPF account, it is tax-exempt only if you render a continuous service for five years, even in different organizations. If you withdraw funds before the specific time, TDS or income tax is applicable as per the existing income tax slabs.