A complete guide to navigating PF withdrawal for expatriates — from understanding applicability and eligibility to managing documentation and overcoming common obstacles.
Jump directly to the section you need
In 2008, India made it mandatory for all the international workers (expats or expatriates) to contribute towards provident and pension fund (Indian social security schemes).
The employer and employee had to make a matching contribution of 12% each towards the scheme.
The contribution was tax-free. So was the interest earned on it and its withdrawal after 5 years of continuous service.
Before this, India had begun forming Social Security Agreements (SSAs) with several countries. According to these SSAs, an expat with a Certificate of Coverage (CoC) from a signatory country is exempt from participating in the social security schemes of India and vice versa for Indian workers in SSA countries.
When an Expat has submitted CoC obtained from their home country (SSA country) in India
Such expat is EXEMPTED from participating in Indian PF
When an Expat is from an SSA Country, being locally employed in India was unable to obtain CoC from their home country
Participation in PF scheme: Mandatory
Withdrawal of PF contribution: Permitted upon completion of Indian assignment
When an Expat belongs to a NON-SSA country
Participation in PF scheme: Mandatory
Withdrawal of PF contribution: Not allowed until expat's age is 58 years
Expats are 'detached' from the social security schemes of India provided they continue to make contributions in their home country.
Upon completion of their assignments of a specified duration, expats can 'export' the benefits from the host country to the home country.
For calculating the employment period to measure the social security benefits of either home country or India, the duration for which the expats were employed in both the countries will be considered in 'totality'. The payment of the benefits will be restricted to the length of the period served in the respective countries on a pro-rata basis.
Navigating the Provident Fund withdrawal process for expatriates in India can be complex and challenging, especially for those from non-SSA countries. Proper preparation, understanding of the regulations, and meticulous documentation can significantly ease this process.
This handbook is designed to help expatriates and their employers navigate the PF requirements in India, offering clear guidance on the withdrawal process.
Some Important Developments In India's Social Security Laws With Respect To Expats
India made it mandatory for expatriate employees working in covered establishments to contribute towards pension and provident fund. Both employer and employee were required to make matching contributions of 12% each.
An amendment excused expatriate employees coming to India on or after September 2014, from participating in pension scheme. Entire contribution should now be made to the PF Fund.
The tax laws were amended to make the employer's contribution to the Provident Fund exceeding INR 7,50,000, along with the interest earned on the excess amount, taxable.
Another amendment in 2021 made interest on employee's contributions exceeding INR 2,50,000 taxable.
In a landmark judgment, the Karnataka High Court struck down provisions extending EPF coverage to international workers, questioning the constitutionality of these provisions. This decision addressed the disparity in provident fund contributions between Indian and international employees.
However, the issue is not fully settled. In a recent press release, the Employees' Provident Fund Organization (EPFO) indicated that options were being evaluated and that it might change the decision.
India has signed Social Security Agreements with the following countries
India has a Bilateral Comprehensive Economic Agreement with Singapore that excludes Singapore citizens who are temporary workers in India from contributing to Indian social security schemes.
Understanding the tax implications at each stage of your PF journey
Despite the eligibility, expats often face several common challenges
One of the foremost challenges encountered by expatriates, especially those who began their Indian employment after September 1, 2014, is discrepancies in contributions.
Employers, often due to a lack of awareness, continue making monthly contributions to both the pension and provident funds when they should be contributing solely to the provident fund.
Another significant challenge arises from erroneous contributions made by employers. Expatriates are obligated to contribute to the PF on their full salary, including payouts such as expat allowance, assignment allowance, and special allowances.
However, employers sometimes mistakenly contribute PF only on the basic salary. This leads to unnecessary delays in the withdrawal process, as authorities require employers to rectify these historic contributions before accepting withdrawal applications.
Expats often encounter challenges related to documentation and procedural complexities in the Provident Fund withdrawal process, especially after a significant period has passed since their assignment in India. Some such challenges include:
Essential steps for both employers and expatriates
Quick answers to the most common PF withdrawal queries
If you no longer have an active Indian mobile number, bank account, or connection with your previous employer, you can still withdraw your Provident Fund (PF).
Yes, you can track the status of your PF withdrawal application online through the EPFO portal using your Universal Account Number (UAN) and password. However, if you do not have an active Indian phone number, you might face difficulties accessing the online portal. In such cases, contact the EPFO office directly or seek help from your previous employer.
To repatriate your PF accumulations:
If you do not have an active Indian bank account, you can withdraw your Provident Fund (PF) through the following options:
Yes, you can apply for an online PF withdrawal even without a cheque book, provided your bank account details are updated and verified in your employee KYC. According to a recent EPFO circular, it is no longer mandatory to upload an image of a cheque leaf or an attested bank passbook for online claims, as long as certain validations, including online/digital verification of bank KYC, are met.
The Universal Account Number (UAN) is a unique 12-digit number assigned to each employee contributing to the Provident Fund. The UAN acts as a unified identification linking multiple PF accounts of a single employee, making it easier to track and manage contributions throughout different employments.
With the UAN, you can easily check your PF balance, and submit transfer and withdrawal requests.
Contact your previous employer to update your KYC details on the EPFO portal, which essentially includes international worker status, AADHAAR, PAN, and bank account details.
No, you do not need to be physically present in India. Ensure your withdrawal application and all necessary documents are correctly prepared and submitted. You can authorize a representative to assist you if needed.
PF withdrawals are tax-free if you have made contributions for at least five years. If the contribution period is less than five years the withdrawals are taxable. The PF authorities will withhold the taxes at 10% while processing the claim. Different tax liability (if any) must be discharged prior to remitting funds to your concerned bank account. Additionally, you must file the income tax return for the year in which your withdrawal was granted.
To resolve discrepancies such as mismatched names, date of birth, or incorrect joining or exit dates, submit a joint declaration form signed by both you and your employer, along with supporting documents that prove the correct details.
If your PF withdrawal application is rejected, identify the reason for rejection, which may include any of the following:
Rectify the issue and resubmit your application. Consider seeking assistance from your previous employer or a professional consultant if your application has been rejected multiple times.
The processing time for a PF withdrawal can vary. Ideally, the application should be processed within 30 days of submission. However, it typically takes about 2-3 months, especially for offline applications. Various factors, such as the accuracy of supporting documents and resolution of discrepancies, can influence this timeline.
Let our experienced team guide you through the entire PF withdrawal process — from documentation to final disbursement. We ensure your rightful dues reach you without hassle.
