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EPFO Rule Changes 2025 Explained: Making it easier for people to dip into their provident fund corpus, the Employee’s Provident Fund Organisation (EPFO) announced a slew of tweaks Monday (October 13) to streamline the categories for drawing out funds, from the current 13 to just three — essential needs (illness, education, marriage); housing needs; and special circumstances.
The number of withdrawals allowed have also been changed for the newly clubbed categories — partial drawals can now be made 10 times for education during the membership and 5 for marriage, as against the existing limit of 3 partial withdrawals for marriage and education combined. Under illness and ‘special circumstances’ categories, withdrawals will be allowed 3 times and 2 times every financial year, as per the agenda for the Board meeting reviewed by The Indian Express.
Also, EPF members can now apply for withdrawals without specifying any reason under the ‘special circumstances’ category, as against the earlier requirement to clarify the reasons, which included natural calamity, lockouts /closure of establishments, continuous unemployment, outbreak of epidemic etc., which would often result in rejection of claims.
EPF members will now be able to withdraw up to 100 per cent of the “eligible balance” in the PF, including employee and employer share from the EPFO, which manages Rs 26 lakh crore for over 30 crore accounts holders. The members, however, would be required to earmark 25 per cent of the contributions in their accounts as the minimum balance they would need to maintain at all times.
In September, the Finance & Audit Committee had deliberated the minimum balance provision in detail, and recommended it to be 25 per cent of the total annual contributions cumulatively in the EPF member’s account, including both employee and employer shares, The Indian Express has learnt.
“This will enable the member to enjoy a high rate of interest offered by EPFO (presently 8.25 per cent) along with compounding benefits to accumulate a high value retirement corpus. This rationalisation enhances ease of access while ensuring members maintain a sufficient retirement corpus. Scheme provision simplification along with greater flexibility and zero need for any documentation will pave the way for 100 per cent auto settlement of claims for partial withdrawal and ensure ease of living,” the Ministry of Labour and Employment said.
The Board, chaired by Union Minister of Labour and Employment Mansukh Mandaviya and with representatives of employees and employers, also approved the requirement of the minimum service period to withdraw funds to 12 months from the minimum 5 years for housing, minimum 7 years for education & marriage, and any time during service for other withdrawals.
Criticism
Some of the provisions, including the 100 per cent eligible balance withdrawal provision, came in for fire from certain quarters. KE Raghunathan, former CBT Member and Employers’ Representative on the Board, said the decision was “deeply concerning and regressive”.
“This move dilutes the very foundation of social security for India’s salaried workforce—especially those living hand-to-mouth. Provident Fund savings are not meant to be treated as recurring deposits for short-term liquidity. They are structured to provide dignity and financial protection at the end of a worker’s career. By allowing repeated full withdrawals, we risk leaving millions with negligible retirement savings and no fallback when income ceases….”
Raghunathan added: “The temptation to withdraw will rise, and the long-term consequences will be irreversible. We are effectively dismantling the safety net that generations have relied upon. More troubling is the support this move has received from trade unions, whose primary mandate is to safeguard long-term worker welfare. By prioritising short-term needs over enduring security, they compromise the very future of the workforce they represent. Short-term needs are perpetual. The Provident Fund was designed to address the one-time need that matters most—retirement. This decision is a step backward in our commitment to social protection.”
Digital transformation
As part of EPFO 3.0, the CBT also approved a digital transformation framework for provident fund services that will include integrating a proven core banking solution with cloud-native, API-first, micro services-based modules for account management, ERP (enterprise resource planning), compliance and a unified customer experience.
“Implementation will proceed in phases, ensuring secure, scalable and uninterrupted services,” the Ministry said, adding that the initiative will enable faster, automated claims, instant withdrawals, multilingual self-service and seamless payroll-linked contributions.
Dispute resolution scheme
A Vishwas Scheme has been launched to reduce litigation through rationalised penal damages for belated remittances of PF dues. Under the scheme, the rate of penal damages will be reduced to a flat rate of 1 per cent per month, except for a graded rate of 0.25 per cent for default up to 2 months and 0.50 per cent for default up to 4 months.
The rates of penal damages before 2024 ranged from 5 per cent to 25 per cent per annum, whereas for delayed remittances prior to 2008, it varied from 17 per cent per annum to 37 per cent per annum. This high rate of penal damages led to a large number of litigations, the Ministry said.
The scheme covers ongoing litigation cases under Section 14B (pending in CGIT, High Courts, or Supreme Court), finalised but unpaid 14B orders, and pre-adjudication cases (where notice has been issued but final order is pending). All cases pending will stand abated in case of compliance under the Vishwas Scheme, the Ministry said.
