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The Employees’ Provident Fund Organisation (EPFO) issued a circular1 dated 19 April 2016, that rescinded the restrictions on withdrawals that had been introduced by the earlier notification2.
Because the earlier notification has been withdrawn, an employee who is not an International Worker3 can make an application to withdraw his or her full accumulated PF balance, where the employee ceases to be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,” 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(PDF 249 KB),” 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 (PDF 189 KB) ( 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.
For additional information or assistance, please contact your local GMS or People Services professional or the following professional with the KPMG
International member firm in India:
Tel. +91 (22) 3090 2010
The information contained in this newsletter was submitted by the KPMG
International member firm in India.
© 2021 KPMG Assurance and Consulting Services LLP, an Indian Limited Liability Partnership and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
KPMG (Registered) (a partnership firm with Registration No. BA- 62445) converted into KPMG Assurance and Consulting Services LLP (a Limited Liability partnership firm) with LLP Registration No. AAT-0367 with effect from July 23, 2020.
For more detail about the structure of the KPMG global organization please visit https://home.kpmg/governance.
Flash Alert is an Global Mobility Services publication of KPMG LLPs Washington National Tax practice. The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.