As the government has announced that all the employees can easily withdraw their EPF from their accounts in order to get a help during this pandemic, people are doing it everyday. On 28th march, EPF organization has received 331,000 claims and has disbursed INR 946.49 crores.
All the employees can make the tax free withdrawals of 3 months of their salary of the 75% of the balance of their EPF accounts. Whichever is lower, will be considered. On an avg, EPFO members who have applied for the withdrawal of INR 28,500 whereas the members of the exempted PF trust look INR 1.9 Lakh. But believe it or not, these withdrawals can make a big long term loss to you.
To those employees who are salaried have to contribute 12% of their monthly salary to the EPF as it is the savings you will be using in your retirement. But if your retirement is 30 years away from now and you have withdraw the amount of INR 1 Lakh from the EPF account now, the retirement corpus will go down by INR 11 Lakh approx.
If we assume that the EPF is giving the interest rate of 8.5% per annum during the period, withdrawing the big amount can hit to your corpus. And if you withdraw INR 3 lakh from your EPF account, it will get reduced by INR 34.67 Lakh.