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Home loan against EPF: Withdrawal rules, Eligibility & Application
This story is from December 9, 2019

Home loan against EPF: Withdrawal rules, Eligibility & Application

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NEW DELHI: An individual who has a Provident Fund (PF) account is allowed to withdraw funds from it against a loan. One can partially withdraw the amount if he/she has applied for a loan for purchasing or renovating house. And, this withdrawal is only possible if one is in the service for 5 years.
Since it's a bit tough for a middle or working class individual to buy a house of their own or get their home renovated, so the provision of money withdrawal from the PF is a good option. And it is not only a good option for buying a new house but is also a good option to speed up the loan repayment.
The EPFO (Employees' Provident Fund Organization) allows its employees for partial withdrawals, which is 90 percent of the accumulations, from their PF accounts. There are a few conditions while you withdraw money from your Provident Fund (PF) account that are as follows:
  • It is important that an employee has completed five years of his/her service for the withdrawal of amount from the Provident Fund. Besides, the partial withdrawals made are tax-free
  • Thewithdrawal for buying or renovating the house should be on self's or spouse's name or should be a joint owning property
  • Post-withdrawal of the amount (reason being construction), the house construction must start within a time frame of six months and should be completed within twelve months from the time of the amount withdrawn
  • If the reason for money withdrawal is purchasing a house or a flat then one needs to make the deal of purchase within a span of six months from the time of the amount withdrawn
  • If an individual is renovating the house, then the house has to be refurbished within six months from the time of the amount withdrawn
  • One needs to fill Form 31 (it is used for withdrawing the savings from Provident Fund Account) to start with the process of money withdrawal for buying, constructing or renovating a house

What is the eligibility criteria to get home loan against the PF?
Mentioned below is the eligibility criteria on the basis of which one can get a home loan against the Provident Fund:
  • Buying or constructing a house: Anyone who is buying or constructing a new house or a flat can make use of their Provident Fund savings. If an individual has completed his five years of service then only he/she is eligible for withdrawing the amount partially which is tax-free. Amount withdrawal is only possible if the property would be in self's name, spouse's name or joint ownership. The maximum amount that an individual can withdraw from their Public Provident Fund (PPF) savings is 36 times the basic salary.
  • Repaying the home loan: Those who want to close their home loan a little faster can do the same by taking the loan against PF or withdrawing money from their PF account. Moreover, one can avail of this facility only once.
  • Purchasing a site or plot: Not only purchasing or renovating a house can be a reason for the withdrawal of savings from Provident Fund but also if anybody is purchasing a site or a plot. Completion of 5 years of service is a must to avail this facility. Moreover, the plot or site should be in the name of the applicant, their spouse or a joint venture. Besides, an employee can withdraw a maximum of 24 times his/her basic salary. If one does not have that much amount then the closest available amount is available for withdrawal.
  • Renovating the house: One can use his Provident Fund savings for renovating their house. But one needs to make sure that the property should be in the self's name or spouse's name or joint ownership. Those who have completed five years of their service are eligible to withdraw money from their Provident Fund to renovate their house. In this case, the amount of withdrawal can be 12 times the basic salary of an individual.
  • Repairing the house: Those who do not have many funds and want to repair their house can use their Provident Fund to make this possible. One can opt out for this facility only if the individual has completed five years of his service ten years after the house has been constructed. One can withdraw a maximum of 12 times the basic salary from their provident fund for repairing the house.

How to apply?
Employees can apply for their EPF in advance by the online facility provided by the Employees' Provident Fund Organisation (EPFO). Applicant is required to fill and submit Form 31, which is available on the UAN portal.
Below given are the steps that need to followed for PF withdrawal:
  • Applicant will have to log in on the EPFO portal using his/her UAN and password
  • Then, the member would go to the 'Online Services' tab followed by the option 'Claim' and select it to generate an online request
  • On clicking 'Claim', the applicant would be directed to a new page which would have all the details of the member, such as name, date of birth, father's name, PAN number, Aadhaar number, date of joining the company, and mobile number
  • The applicant can check if the information is correct or not. If it is correct, then he/she can click on the option 'Proceed for Online Claim'
  • After this, the next page that opens will be the type of claim the member would like to apply for. Further, he/she would select 'PF ADVANCE (FORM 31)' in the drop-down menu
  • Now, he/she will have to select the reason for advance from the drop-down menu
  • In the next step, one needs to fill the required amount and his or her current address
  • On completing the same, the applicant will have to sign the declaration. On checking the box, the option 'Get Aadhaar OTP' would appear. One needs to click on it so that OTP is received for authentication
  • Enter the OTP and click on 'Validate OTP and Submit Claim Form'. This completes the application process for EPF advance application
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