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Savings are useful in difficult times. Whether the savings are in your savings account or PF account, you can use it in difficult times in the coming times. There is no problem in withdrawing money from the savings account several times, but if you withdraw money from the PF account repeatedly, then you are causing a great loss to yourself.
If money is being deposited in the PF account from your salary, then it should be withdrawn only at the time of need. In this news, we tell you what are the disadvantages of withdrawing money from PF repeatedly.
What actually happens is that as soon as we see money in our PF account, we withdraw it and spend it even if we don’t need it. We forget that we get the benefit of compound interest on the amount deposited in PF. This benefit ends as soon as we withdraw the money.
How to withdraw money from PF?
Money can be withdrawn from PF in two ways. First as half amount and second as full amount. Half amount can be withdrawn while in job, while full amount can be withdrawn after retirement or after leaving the job.
Rules for withdrawing half amount
As we told you, you can withdraw half of the money from PF while you are still in job. However, the government has put some conditions for this, such as money can be withdrawn only for marriage or children’s education, buying, building or repairing a house, medical problems, paying electricity bill. One thing to note is that money can be withdrawn only up to different limits for each reason.
Rules for withdrawing full amount
You can withdraw the full amount after the age of 58 or after retirement. There are no rules or conditions for this. On the other hand, if you have left your job and are unemployed for 2 months, then you can withdraw the entire PF amount. However, if it has been only 1 month since you left your job, then you will be able to withdraw only 75% of the total deposited amount.
What are the disadvantages of withdrawing money frequently?
- As we told you, the return on the amount deposited in PF is received in the form of compound interest. If the money is withdrawn repeatedly, you will not be able to take advantage of the magic of compounding.
- You can withdraw the amount for marriage or children’s education only three times, so if you are withdrawing money repeatedly with this option, it may cause a problem later.
- There is a tax on withdrawing PF money before 5 years. However, after 5 years it becomes tax free.
- Withdrawing the amount several times in a year defeats the purpose of PF. Due to lack of savings, the PF account becomes empty at the time of medical emergency or need.
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