Employees Provident Fund (EPF): Withdraw 90 per cent of the Fund to Buy a House or Payment of Home Loan EMI
Employees Provident Fund (EPF) Subscribers may now withdraw up to 90% of their Provident Fund (PF) to pay for the down payment/EMI towards purchase of a new house. EPFO has now allowed subscribers to withdraw accumulations from the Fund by amending the Act. The new paragraph 68-BD will enable Subscribers to withdraw up to 90% of the fund from their account. EPF Withdrawal norms have been relaxed to encourage Subscribers to buy their own home. As Government has set a target of “Housing for All by 2022”. The move will benefit more than 4 crore Subscribers to the EPF.
The withdrawal will include Employee’s contribution as well as Employer’s Contribution along with accumulated interest. However, the EPFO has set down certain prerequisites to be fulfilled before one can apply for the withdrawal.
Previous Norms for Withdrawal
Earlier too the withdrawal was possible but the norms were more strict which restricted Subscribers to avail the same for purchasing a home. Subscribers were required to be the member of the fund for 5 years and only 36 months Basic plus dearness allowance (DA) was allowed for construction or purchase of house/flat while 24 months Basic and DA was allowed for purchase of land.
Conditions for Withdrawal of Funds under 68-BD
Subscriber has to be member of the Fund for a minimum of 3 years before he/she can apply for the withdrawal.
EPFO Subscriber will be able to withdraw up to 90% of their accumulation in the PF account or cost of the property, whichever is less to provide for purchase, construction of house/flat/land.
EMI on home loans may also be paid through PF Fund, provided the loan is the name of the Subscriber or the spouse respectively.
The accumulation of Fund in the account of the Subscriber together with the spouse should be more than Rs 20,000/-.
EPFO Subscriber has to be a member of a Co-operative society or any housing society registered under law with minimum 10 members to be eligible for the Withdrawal from the Fund.
Fund will be directly paid to the Government, Housing Agency, primary Lending Institution or the Bank lending out the loan.
The facility will be available only once to the subscriber during the tenure of his/her membership.
If the money withdrawn exceeds the actual fund utilized for purchasing the property then the excess amount should be refunded in full within 30 days of finalization of plot/flat or house.
Beneficial for Subscribers
The new amendment will benefit the Subscribers who are planning to avail advance from EPF to purchase or construct a new house/flat or plot. This option will help them meet their financial obligation without having to cut down on their normal expenses.