EPF for NRIs
India’s EPF or Employees Provident Fund is a mandatory deduction from the paychecks of all organized sector employees in India. While EPF delivers Indian employees a high interest rate and allows them to grow their savings, the situation changes when you become an NRI.
What changes
As per the EPF rules, 12% of an employee’s basic pay is deducted and the employer must match it with a 12% contribution from its own side. This money is set aside and earns interest (currently 8.25%) every year. This interest is tax-free for Indian employees who continue to work and are members of the EPF.
However once you leave India, you are no longer a contributing employee. Fresh interest keeps accruing on your EPF account till age 58 but it becomes taxable. The EPF interest may also get taxed in your country presenting a dual problem to you. It thus makes sense to withdraw the EPF balance while departing India.
The rules
If more than 1 month has passed since leaving your job, you can withdraw 75% of the EPF balance on grounds of unemployment. After 2 months you can withdraw 100%. However if you wish to withdraw before even a single month passes, you can withdraw using ‘abroad settlement’ as the reason. Abroad settlement is procedurally more difficult than unemployment when it comes to making EPF withdrawal. You have to submit copies of passport, visa, NRO/NRE details etc. Hence you should preferably use the unemployment ground for withdrawal. Note that employment abroad does not count as being employed in the eyes of the EPFO. According to some major reforms agreed to by the apex Central Board of Trustees, after a few months you will be able to make ‘partial withdrawals’ up to 75% of the corpus without assigning any reason. However, the balance 25% will remain locked-in for 12 months after quitting your job.
Withdrawing money from abroad
It is possible to withdraw money online from the UAN portal or Umang App but practically difficult if you don’t have things like an Aadhar-linked Indian number. No tax is deducted if you’ve completed at least 5 years of service. If you have multiple EPF balances, transfer them to your latest one and then make the withdrawal. Do note, if you have more than 10 years service in India, the EPS (pension) part cannot be withdrawn. Take the help of professionals if you’re not able to do the withdrawal yourself.
Most Asked Questions About EPF (Employees Provident Fund) for NRIs
How does EPF work for employees in India?
Under EPF rules, 12% of basic salary is contributed by the employee and 12% by the employer into a fund that earns an administered interest rate, which is tax‑free for active employees.
What changes for my EPF when I become an NRI?
After leaving Indian employment, contributions stop, interest continues to accrue but becomes taxable in India and may also be taxed in the new country of residence.
Why is it usually better to withdraw EPF when leaving India?
Continuing to hold EPF as an NRI can lead to taxable interest in two jurisdictions; withdrawing allows redeployment into more tax‑efficient and flexible instruments.
When and how much EPF can I withdraw after leaving my job?
After one month of unemployment you can withdraw up to 75% of the balance, and after two months you can generally withdraw 100% of the EPF corpus.
What is “abroad settlement” as a withdrawal reason and how is it different?
Abroad settlement allows earlier withdrawal on proof of permanently leaving India but involves more documentation than using the simpler unemployment reason.
What upcoming changes affect partial EPF withdrawals?
Policy changes envisage partial withdrawals up to a defined percentage without specifying reasons, while keeping a portion locked for a set period after quitting.
Is my EPF withdrawal taxable if I have completed at least five years of service?
Withdrawals after five or more years of qualifying service are typically not subject to tax deduction in India, improving net proceeds.
How should I handle multiple EPF accounts from different employers?
These balances should be consolidated into the latest EPF account through transfers before making a single, clean withdrawal.
Can I withdraw the EPS (pension) portion if I have over 10 years of service?
Once 10 years of eligible service is completed, the pension component usually converts to a deferred pension rather than a cash‑withdrawable balance.
How can NRIs withdraw EPF from abroad and what practical issues arise?
Online withdrawal is possible via EPF portals, but missing elements like Aadhaar‑linked mobile numbers often necessitate help from professionals or representatives in India.
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