For any person or organization that has a medical treatment and is withdrawing pf from its health insurance policy, there are many things to consider. These include the employer’s contribution, the amount you are allowed to withdraw, and the limit for pf withdrawals.
Employer contribution
EPF is a social security scheme which offers retirement benefits to employees. Employees are required to contribute to this scheme. The contribution amount is based on a financial year. For Indian employees, the maximum amount is INR 15,000 per month.
A portion of the money deposited in this scheme is tax free. This includes the interest earned on the contributions made by the employee. In addition, a portion is also eligible for tax deduction under Section 80C.
When an employee withdraws from the EPF, the funds are considered taxable under a number of conditions. One of the conditions is that the withdrawal must be offered in return for an income. However, some employees are exempt from this tax.
The amount withdrawn from PF is generally a combination of the investment portion and the interest. Taxability of the latter depends on the time of withdrawal. It is advisable to allow the funds to grow until they reach maturity. Once the accumulated funds reach the maturity point, the employee can withdraw the money without worrying about the tax implications.
An employee is allowed to make withdrawals from the EPF, if he has been employed with an organization for at least five years. If an employee has been working with an organization for less than five years, the withdrawals will be taxed.
Limit
The Employee Provident Fund is a mandatory savings scheme where an employee contributes a fixed percentage of his or her salary to the fund. With the passage of time, the funds accumulated in the PF account are exempt from tax. However, if the interest earned on the fund exceeds the prevalent rate, it is charged as income from other sources.
A member can withdraw a sum of up to 90% of the accumulated corpus, provided the withdrawal is made within one year of retirement. This amount can be used for housing, education, down payment, and construction of a new house. It can also be transferred to another provident fund.
An employee’s contribution to the provident fund is eligible for deduction under Section 80C. If the total of the employer and employee contributions to the PF is within the 12% limit, the contribution is tax-free.
An employee can take advantage of the EPF withdrawal rules to cater to urgent needs. However, before making a withdrawal, it is important to know the eligibility criteria. Some of the criteria include the age of the person, reason for withdrawal, and the maximum amount that can be withdrawn.
Normally, employees are required to serve at least five years before making a PF withdrawal. However, if an employee has a tenure of five years with the employer, he or she can make an EPF withdrawal after five years.
Medical treatment for withdrawal of pf
The Employees Provident Fund Organisation (EPFO) allows withdrawal of funds from PF accounts for medical treatment. This is a tax-free scheme. In fact, you can withdraw up to a 90% of your PF balance. It also provides flexibility to cater to your emergency needs.
Before you withdraw, check out the rules and regulations. The maximum PF withdrawal limit depends on the PF holder and the reason for the withdrawal. Also, keep in mind that you must have met the minimum service requirement.
The PF account can be withdrawn for several purposes, including home repair, medical treatment, or a home purchase. A PF withdrawal for a home purchase may be limited to 36 months of salary plus the interest earned on the funds.
Similarly, EPF withdrawal for a home repair can be made after the construction of the house. However, the funds are only tax-free if you have been working for at least five years. Moreover, withdrawals for home repairs are only allowed for those who have reached retirement age.
Besides the PF corpus, the interest earned on the funds is also tax-free. For example, if you are buying a home and your home is registered in your name, you can withdraw the amount of your basic salary and dearness allowance.
