Employees must ensure that they have completed KYC to prevent delay/rejection in EPF withdrawals; personal information such as name, date of birth, and signature on the application must match the EPF database; and Aadhaar and UAN must be linked.
Sarnath Sen, a mid-level employee, at a software firm, based out of Kolkata, recently tried several times to withdraw his provident fund (PF) money, amounting to around Rs 25 lakh, from his employee provident fund (EPF) account, but he couldn’t manage to do it.
“I tried to follow all the right procedures, but due to whatever reasons, I didn’t receive the money. Moreover, the server doesn't work most of the time. Sometimes I have applied after a lot of struggle. I needed it for a close relative’s medical expenses. Now I am feeling frustrated,” rues Sen.
And this is not a lone incident. In the past five years, according to several media reports, people across the country have faced similar situations and felt angry, and dejected. And recently, a retired employee from Kochi committed suicide inside the EPF office, after facing a claim rejection.
According to a recent report by The Indian Express, rejection rates of EPF final settlement have been surging, up from around 13 per cent in 2017-18 to nearly 34 per cent in 2022-23, which translates into over one in every three claims for final settlement of PF amount made by the members being turned down by the EPFO.
Out of the three PF claim categories – final settlement, transfer, and withdrawal – the rejection rate has sharply increased for the final settlement of PF claims over the last five years.
Official data show that out of the total 73.87 lakh claims received for final PF settlement in the financial year 2022-23, 33.8 per cent (24.93 lakh) were rejected, while 46.66 lakh were settled and 2.18 lakh remained as closing balance.
This has been sharply higher than the rejection rate seen in 2017-18 and 2018-19, which stood at around 13 per cent and 18.2 per cent, respectively.
The rejection rate, calculated as a percentage of rejected claims out of total applications for claims, increased further to 24.1 per cent in 2019-20 and 30.8 per cent in 2020-21 for final settlement claims.
In 2021-22, the rejection rate for final settlement claims increased to 35.2 per cent.
a) Mismatch In Name: The name in EPF records should match with Aadhar records so ensure the same before filing the withdrawal. Otherwise, you have to submit a joint declaration along with a claim to correct it.
b) Mismatch In Date of Birth (DoB): Again DoB in EPF records should match with Aadhar records.
c) Incomplete KYC: Complete KYC with EPFO before filing the claim.
d) Joint Bank Account: EPFO will credit the amount only in an individual or joint bank account held with the spouse so ensure the same before filing the claim.
e) Error In Bank Account Details: Make sure the bank account details are the same as updated in EPFO records.
g) Mismatch In Date Of Joining And Leaving The Organisation: Check the joining date and rectify the same in case of a mismatch by approaching the organization for correction.
h) Non-linking Of UAN With Aadhar: Link Aadhar with UAN before filing the claim.
i) Incorrect Application Form: Ensure the correct form is selected while filing the claim.
“If there is a discrepancy between the name recorded in the EPF files and the one stated on Aadhaar, it is essential to submit a joint declaration along with the claim to rectify it, according to EPFO guidelines. Moreover, failure to complete KYC with the EPFO records may result in the rejection of an EPF claim, It’s advisable to ensure KYC completion before processing with an EPF account claim,” says Abhishek Kumar, a Securities and Exchange Board of India (Sebi) registered investment advisor (RIA), and founder, Chief Investment Advisor of SahajMoney, a financial planning firm.
Also, if a joint bank account is provided that is not held with a spouse, EPF claims may face rejection.
EPFO will disburse claim funds into either an individual bank account or a joint account held jointly with a spouse.
“During bank details verification, it is imperative to verify the bank account number, IFSC Code, bank name, and branch details. In the event of an IFSC change or any other bank detail alteration due to a merger, it is essential to update the EPFO records before filing a claim,” says Suneel Dasari, founder and CEO of EZTax.
“Claim rejections often occur due to unclear images of cheques or passbooks. Ensure to upload original and clear pictures of your cheque or passbook to prevent rejection. Avoid uploading photocopies of cheques or passbooks to minimize the risk of rejection,” adds Dasari.
In case of bank detail discrepancies, EPF account holders must update their KYC and bank details on the EPF portal online.
It's crucial to ensure that your name is visible on the uploaded copy of your cheque or on the first page of your passbook.
If your name is not printed on the cheque, the EPF member should upload the first page of their bank passbook.
Occasionally, the dates of an employee's joining and departure from the organization are either inaccurate or not updated on the EPFO's portal.
To rectify the joining date, individuals need to contact the organization for correction.
However, EPFO permits employees to update their exit date independently on the EPFO portal.