New EPFO rules mandate 3-day PF settlements, simplify withdrawals

New Delhi: The government has revamped the Employees' Provident Fund Organisation (EPFO) rulebook, mandating settlement of PF withdrawal claims within three days, imposing a 12% penal interest on delays by officials beyond 20 days, simplifying withdrawal rules and paperwork, and making the whole process digital.

Among the key changes for subscribers, employees who lose their jobs will now be able to withdraw up to 75% of their PF balance immediately after becoming unemployed. The new framework reduces advance withdrawal categories from 13 to three-illness, education and marriage-and lowers the minimum service requirement for several withdrawals to 12 months from the existing seven years.

There are special considerations for withdrawal, including housing under which employees can use the corpus for buying a house or plot, constructing a house, repaying a home loan and carrying out repairs or improvements.


Eligible withdrawals will now include the contributions of both employee and employer, along with accrued interest. The cap of 12% of basis wages for mandatory employee contribution remains unchanged.

The Ministry of Labour and Employment on Wednesday notified the Employees' Provident Funds Scheme, 2026, Employees' Pension Scheme, 2026 and Employees' Deposit-Linked Insurance Scheme, 2026 under the Code on Social Security, replacing the existing EPF, pension and insurance schemes.

Fast processing

The notified rules require the EPFO to settle provident fund withdrawal claims within three days. Pension and Employees' Deposit Linked Insurance claims must be processed within 20 days.

To enforce accountability, the rules provide that if the EPFO commissioner fails, without sufficient cause, to settle a claim complete in all respects within the prescribed timeline, penal interest at 12% per annum may be added to the benefit amount for the period of delay. The amount may be recovered from the commissioner's salary.

The schemes contained a penal interest provision previously as well, but the rate was linked to the declared EPF interest rate. Now it has been fixed at 12% and the enforcement made stricter.

The notification lowers the age for full withdrawal of the PF corpus to 55 years. Full withdrawal is also permitted in cases of permanent disability, retrenchment, voluntary retirement schemes, or permanent migration outside India.

The new framework places greater emphasis on digital compliance. Employers and exempted establishments will be required to facilitate online filing of claims and applications, enabling faster and paperless delivery of EPFO services and withdrawal of PF through the unified payment interface (UPI).