Want to withdraw money from your provident funds through UPI? Testing starts: Here are 3 things you should know | Report
Provident fund withdrawals could soon become easier through UPI. The Employees’ Provident Fund Organisation (EPFO) has started testing this facility with banks.
An official told Moneycontrol that the launch was expected by the end of December. Here are 3 things subscribers should know about these developments.
UPI withdrawals
The proposed facility will allow subscribers to withdraw provident fund money through UPI. EPFO plans to connect the UAN portal with subscribers’ UPI accounts. This aims to simplify the withdrawal process.
However, testing has begun, and the launch remains expected. Subscribers should distinguish the planned service from the currently available withdrawal process.
New app
EPFO is expected to introduce an app linked to subscribers’ bank accounts. Moneycontrol earlier reported that it would also connect with BHIM and other UPI apps. Currently, subscribers submit withdrawal claims online through the UAN portal.
After processing the claim, EPFO transfers the amount into their bank account. Subscribers can then access that money through their bank. The proposed system aims to integrate these services more closely to enable easier withdrawals.
Withdrawals to have limits
Subscribers could withdraw up to 75% of their eligible balance through UPI. This facility will remain subject to conditions. Under current rules, at least 25% must remain in the provident fund account. Eligible short-term needs include education, marriage, and housing expenses.
The retained amount continues earning tax-free interest. Therefore, the proposed service should not be understood as unrestricted access to money. Withdrawal eligibility and the amount available will still matter for subscribers.
Wage ceiling hike
Meanwhile, a higher wage ceiling could change contributions for some employees. The Cabinet has raised the wage ceiling from ₹15,000 to ₹25,000. The earlier ceiling was set in 2014, making this revision the first after 12 years.
Union minister Ashwini Vaishnaw linked the increase to wage growth and the expansion of formal employment. The change brings another 51 lakh employees under mandatory provident fund coverage.
EPFO has about 30 crore subscribers, including around 7.5 crore contributing members. Its total fund is close to ₹26 lakh crore, according to Moneycontrol sources.
For contributions capped at ₹15,000 earlier, the employee’s monthly deduction could rise. At 12%, contributions increase from ₹1,800 to ₹3,000 under the higher ceiling. This means ₹1,200 extra monthly, or ₹14,400 annually.
Similarly, the employer’s statutory contribution also increases. However, take-home pay depends on the salary structure and how employers calculate contributions.
