Table of Contents
- Introduction
- What is EPF?
- EPF Withdrawal Options
- EPF Complete Withdrawal
- EPF Partial Withdrawal
- Rules and Guidelines of PF Withdrawal for Home Loan
- Documents Needed for PF Withdrawal for Home Loan
- Ways to Withdraw Provident Fund for a Home Loan
- PF Withdrawal With UAN (Universal Account Number)
- PF Withdrawal Without UAN
- PF Withdrawal Through UAN Portal
- PF Withdrawal Through UMANG App
- PF Withdrawal Offline
- Check the Status of Your PF Withdrawal Claim
- PF Withdrawal Tax Rules
- PF Customer Care Contact Details
- Conclusion
- Faq's
Introduction
When embarking on the journey of buying a new home, the financial aspect can often be the most challenging part. While some may rely on their savings or opt for a traditional home loan, there's another avenue that's often overlooked but can be quite beneficial: using your Employee Provident Fund (EPF) through a PF withdrawal.
Firstly, let's understand what EPF or PF stands for. It stands for Employee Provident Fund, which is a retirement savings scheme where both the employee and employer contribute a portion of the employee's salary every month. This fund accumulates over time and can be a significant asset.
When it comes to buying a home, utilizing your PF money can be a game-changer. The rules around PF withdrawal allow for it to be used specifically for purchasing or constructing a house, or even for repaying a home loan taken for this purpose. This flexibility makes it an attractive option for many homebuyers.
The process of PF withdrawal for a home purchase is relatively straightforward. You can initiate the withdrawal online through the official EPF portal or by submitting a physical application to the EPFO (Employee Provident Fund Organization). It's essential to have all the necessary documents in place, such as the agreement to purchase the house or the loan repayment details, to ensure a smooth withdrawal process.
One of the advantages of using PF money is that it's your savings, so there's no additional debt burden involved. However, it's crucial to weigh the pros and cons and understand the impact on your retirement savings before making a decision.
Leveraging your EPF through a PF withdrawal can be a convenient and viable option for financing your new home. It's a resource that you've diligently contributed to over the years, and using it wisely can help fulfill your homeownership dreams without unnecessary financial strain.
Let us understand this in detail
What is EPF?
The Employee Provident Fund (EPF) is a crucial financial instrument designed to provide retirement benefits and financial security to employees in India. It operates under the purview of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952, and is managed by the Employees' Provident Fund Organisation (EPFO), a statutory body under the Ministry of Labour and Employment, Government of India.
EPF functions as a compulsory savings scheme for employees in the organized sector, including establishments with 20 or more employees. Both the employer and the employee contribute a certain percentage of the employee's salary to the EPF account every month. Currently, the contribution rate is set at 12% of the employee's basic salary and dearness allowance, with the same amount contributed by the employer.
The contributions to EPF not only serve as a retirement savings avenue but also offer various other benefits. One of the primary advantages is the accumulation of a substantial corpus over time, which can be utilized by employees during critical life stages such as buying a house, medical emergencies, education expenses, or even during periods of unemployment through the EPF withdrawal facility.
The EPF account is a long-term investment tool, and the accumulated amount earns interest, which is decided by the government each year. This interest is compounded annually, contributing significantly to the growth of the EPF corpus.
One notable feature of EPF is its tax benefits. Contributions made towards EPF are eligible for tax deductions under Section 80C of the Income Tax Act, up to a specified limit. Additionally, the interest earned and the maturity proceeds from EPF are generally tax-exempt, subject to certain conditions.
EPF not only promotes a culture of savings but also instills financial discipline among employees, ensuring a secure retirement and a safety net during unforeseen financial challenges. It plays a vital role in the overall financial well-being and social security of the workforce, making it a cornerstone of India's social security framework.
|
Feature/Benefit |
Description |
|
Purpose |
Retirement savings and financial security for employees in India |
|
Regulatory Body |
Employees' Provident Fund Organisation (EPFO) |
|
Applicability |
Organized sector establishments with 20 or more employees |
|
Contribution Rate |
12% of the employee's basic salary and dearness allowance, matched by the employer |
|
Accumulation |
Builds a substantial corpus over time through regular contributions |
|
Interest Rate |
Decided by the government annually; interest is compounded |
|
Tax Benefits |
Contributions eligible for tax deductions under Section 80C of the Income Tax Act |
|
Withdrawal Options |
Possible for specific purposes like retirement, buying a house, medical emergencies, education, etc. |
|
Compulsory Savings |
Encourages financial discipline and long-term savings culture among employees |
|
Social Security |
Provides a safety net and financial stability during retirement and unforeseen circumstances |
EPF Withdrawal Options
Withdrawals from the Employee Provident Fund (EPF) can be made either entirely or partially, depending on specific circumstances.
Also Read: E-Nomination: How to Update or Change EPF Nominees Online?
EPF Complete Withdrawal
- Retirement: A person can withdraw the entire EPF balance upon retirement from employment.
- Unemployment: If an individual remains unemployed for more than one month, they can withdraw 75% of the total EPF balance. If the unemployment period extends beyond two months, the remaining 25% can also be withdrawn.
It's important to note that individuals cannot withdraw the entire EPF balance when switching jobs unless they remain unemployed for two months or more between jobs. This interim period is crucial for complete EPF withdrawal during job transitions.
EPF Partial Withdrawal
|
Circumstances for Partial Withdrawal |
No. of Years of Service Required |
Conditions for Partial Withdrawal |
Limit for Withdrawal |
|
Medical Purposes |
No specific criteria |
Medical treatment of self, spouse, children, or parents |
Lower of: 1. 6 times the monthly basic salary, or 2. The total employee's share plus interest |
|
Marriage |
7 years |
For personal, children's, or siblings' marriage |
Up to 50% of the employee's share of EPF contribution plus interest |
|
Education |
7 years |
For either the account holder's post-matriculation education or their child's education |
Up to 50% of the employee's share of EPF contribution plus interest |
|
Purchase of Site/Flat/House and Construction |
5 years |
The property, such as land or a house, must be under the ownership of the employee, their spouse, or jointly held with the spouse |
Lower of: 1. Up to 24 months' basic wages plus dearness allowance in case of site purchase OR 2. Up to 36 months basic wages plus dearness allowance in case of purchase of house/ flat or construction |
|
Purchase of a home, plot, or apartment, or repayment of a construction loan |
10 years |
The property must be registered in the employee's name, their spouse's name, or jointly owned with the spouse. Withdrawal is permitted subject to the furnishing of requisite documents relating to the housing loan availed. |
Least of: 1. Up to 36 months' basic wages plus dearness allowance 2. The combined fund comprising contributions from both the employer and employee, along with accrued interest 3. The entire remaining balance including the principal amount and accrued interest on the housing loan.
|
|
House Renovation |
5 years |
Ownership of the property should be in the name of the employee, their spouse, or jointly with the spouse The facility can be availed twice: a. First time - After 5 years of the completion of the house b. Second time - After 10 years of the first withdrawal |
Least of: 1. Up to 12 months' basic wages plus dearness allowance 2. Employee's contribution with interest 3. Total cost of renovation |
|
Partial Withdrawal before Retirement |
Upon reaching 54 years |
The employee must reach 54 years and withdrawal should be made before one year of retirement or superannuation |
Up to 90% of accumulated balance with interest |
Rules and Guidelines of PF Withdrawal for Home Loan
When considering a PF withdrawal for a home loan, it's crucial to understand and adhere to specific rules and conditions set forth by the Employee Provident Fund Organisation (EPFO). These rules ensure that your PF savings are utilized for valid and essential purposes, such as home purchases. Let's get into the detailed rules and guidelines for PF withdrawal for housing:
- Withdrawal Limit: Individuals can withdraw up to 90% of their EPF balance for home purchases. This substantial limit allows for a significant portion of your PF savings to be utilized towards owning a home.
- Service Period Requirement: To be eligible for PF withdrawal for a house purchase, a minimum service period of five years is mandatory. This rule emphasizes the aspect of long-term employment and commitment to savings.
- Tax Implications: It's important to note the tax implications of early PF withdrawal. Withdrawing PF before completing five years of service results in taxation under the "Income from other sources" category, with a 10% Tax Deducted at Source (TDS). Understanding these tax implications helps in better financial planning.
- Joint Purchase: PF withdrawal for property purchase is typically allowed only in joint ownership with your spouse. This ensures clarity and legal compliance in property ownership.
- Ownership Requirement: The new house being purchased must be jointly owned by you, your spouse, or both. This rule emphasizes the intended use of the PF withdrawal funds towards acquiring a primary residence.
- Installment Withdrawals: PF withdrawal for housing should be done in installments. The construction of the house should commence within six months of the first withdrawal and must be completed within 12 months of the last installment. These guidelines ensure that the funds are utilized efficiently for the intended purpose.
- Property Transaction Time Frame: If PF withdrawal is utilized to buy a house, the property transaction should be completed within six months from the date of the online PF withdrawal. This time frame ensures the timely execution of property transactions.
- One-time Use: PF withdrawal for housing is permitted only once in a lifetime. This rule underscores the importance of judiciously using PF savings for essential housing needs.
|
Rule / Guideline |
Description |
|
Withdrawal Limit |
Up to 90% of EPF balance for home purchases. |
|
Service Period Requirement |
A minimum of five years of service is needed for eligibility. |
|
Tax Implications |
Early withdrawal (before 5 years) incurs 10% TDS. |
|
Joint Purchase |
Allowed only in joint ownership with a spouse. |
|
Ownership Requirement |
The new house must be jointly owned by the individual and/or spouse. |
|
Installment Withdrawals |
Withdrawals should be in installments; construction within 6 months of first withdrawal. |
|
Property Transaction Time Frame |
Property transaction completion within 6 months of online PF withdrawal for buying a house. |
|
One-time Use |
PF withdrawal for housing is permitted once in a lifetime. |
By adhering to these rules and guidelines, individuals can navigate the PF withdrawal process for housing with clarity and compliance, ensuring the effective utilization of their savings towards homeownership goals.
Documents Needed for PF Withdrawal for Home Loan
When applying for a Provident Fund (PF) withdrawal to pay a home loan, you must ensure you have the necessary documents ready. These documents help verify your identity, facilitate the transaction, and ensure compliance with regulations. Here are the documents typically required for a PF withdrawal for home loan payment:
- PAN Card: Your PAN (Permanent Account Number) card is essential for tax-related matters and serves to confirm your identity.
- Aadhaar Card or Employer's Authorization Letter: An Aadhaar card is commonly used to verify your identity. However, if you don't have an Aadhaar card, an employer's authorization letter can serve the same purpose. It's provided by your employer and validates your identity for the withdrawal process.
- Universal Account Number (UAN): You need the 12-digit UAN associated with your PF/EPF account. The UAN facilitates the management of your PF account and is crucial for processing withdrawals.
- Bank Account Details: Provide your bank account details accurately. This information is necessary to transfer the withdrawn amount from your PF account to your bank account seamlessly.
- Phone Number: Ensure your phone number is updated and accurate. It is used for communication purposes regarding the withdrawal process and any related updates or queries.
Having these documents in order streamlines the PF withdrawal process for home loan repayment, ensuring a smooth and hassle-free transaction while adhering to regulatory requirements.
Ways to Withdraw Provident Fund for a Home Loan
Are you curious about withdrawing your PF amount for a home loan? Here are ways how you can make a PF withdrawal for your home loan.
PF Withdrawal With UAN (Universal Account Number)
Step 1: Log in to the EPFO Portal
- Visit the EPFO portal https://www.epfindia.gov.in/
- Log in using your Universal Account Number (UAN) and password.
EPFO Portal
Step 2: Access Online Services
- After logging in, navigate to the 'Online Services' section on the portal.
Step 3: Select Claim (Form-31, 19, 10C)
- Under the Online Services tab, select the option 'Claim (Form-31, 19, 10C)'.
Step 4: Verify Member Details
- Once you select the claim option, your member details will be displayed on the screen.
- Verify these details to ensure accuracy.
Step 5: Sign the Certificate of Undertaking
- You will be prompted to sign the certificate of undertaking. Click on 'Yes' to proceed with the claim.
Step 6: Choose PF Advance (Form 31)
- After signing the undertaking, you will be directed to the claim form.
- From the menu within the claim form, select 'PF Advance (Form 31)'.
Step 7: Provide Necessary Details
- Fill in the required details in the claim form. This includes specifying the purpose for which the advance is required, the amount needed, and your current address.
Step 8: Request Aadhaar OTP
- Click on 'Get Aadhaar OTP' to request an OTP (One-Time Password) on your Aadhaar-linked mobile number.
Step 9: Enter Aadhaar OTP
- Once you receive the OTP on your registered mobile number, enter it in the designated field on the EPFO portal.
Step 10: Validate OTP and Submit Claim Form
- After entering the OTP, click on 'Validate OTP and Submit Claim Form'.
- Your claim form will be submitted for processing.
Step 11: Review and Approval by Employer
- Your employer will receive your claim for review and approval.
- Upon approval, the requested amount will be credited to your bank account linked with your EPF account.
PF Withdrawal Without UAN
Step 1: Download and Fill Forms
- Download Form 19 for PF withdrawal and Form 10C for pension withdrawal from the EPFO website or visit your employer's HR department to obtain these forms.
- Fill out both forms accurately and completely. Include details like your name, PF account number, reason for withdrawal, bank account details, etc.
Step 2: Attach Necessary Documents
- Collect the necessary documents required for withdrawal, such as a canceled cheque leaflet from your bank account where you want the PF amount to be credited.
- Attach a self-attested copy of your PAN card or Form 60/61 (if PAN is not available).
- Ensure all documents are clear and legible.
Step 3: Submit Forms and Documents
- Once you have filled out the forms and gathered the required documents, submit them to your employer or the concerned EPFO office.
- Make sure to keep a copy of the filled forms and documents for your records.
Step 4: Processing and Verification
- The EPFO will process your withdrawal request after receiving your forms and documents.
- They will verify the details provided and check if all necessary documents are attached.
Step 5: Approval and Payment
- Upon successful verification, your PF withdrawal request will be approved.
- The approved amount will be credited directly to the bank account mentioned in your withdrawal form.
Step 6: Check Bank Account
- Keep an eye on your bank account to ensure that the withdrawn PF amount is credited without any issues.
- It may take a few days for the amount to reflect in your bank account, depending on the processing time of the EPFO and your bank.
PF Withdrawal Through UAN Portal
Step 1: Log in to the UAN Portal
- Go to the UAN portal
https://unifiedportal-mem.epfindia.gov.in/memberinterface/ - Log in using your Universal Account Number (UAN) and password.
UAN Portal
Step 2: Verify KYC Information
- After logging in, navigate to the 'Manage' tab.
- Verify and ensure that your KYC (Know Your Customer) information like Aadhaar, PAN, bank account details, etc., are updated and accurate.
Step 3: Access Online Claim Services
- Look for the 'Online Services' tab on the portal.
- Select the 'Claim' option and then choose 'Proceed for Online Claim'.
Step 4: Select PF Advance (Form 31)
- Within the online claim process, choose 'PF Advance (Form 31)' as the reason for your claim.
Step 5: Fill Out Claim Forms
- Fill out the required forms and provide the necessary details such as the purpose for the advance, the amount required, and your address.
- Ensure all details are accurate and up to date.
Step 6: Submit Claim
- Review the information provided in the claim form.
- Once you are satisfied with the details, submit the claim form through the portal.
Step 7: Claim Approval Process
- After submission, your claim will be forwarded to your employer for verification and approval.
- Your employer will review the claim and approve it if everything is in order.
Step 8: Amount Credited to Bank Account
- Once approved by your employer, the requested amount will be credited directly to the bank account linked with your UAN.
- Keep track of your bank account to ensure timely receipt of the credited amount.
PF Withdrawal Through UMANG App
Step 1: Download and Open Umang App
- Download the Umang app from your smartphone's app store and open it.
UMANG App
Step 2: Access EPFO Services
- In the Umang app, select 'EPFO' from the list of services provided.
Step 3: Navigate to Employee Centric Services
- Within the EPFO section, locate and select 'Employee Centric Services'.
Step 4: Raise Claim
- Under Employee Centric Services, choose 'Raise Claim' to initiate the claim process.
Step 5: Authenticate Using UAN
- Enter your Universal Account Number (UAN) when prompted.
- You will receive an OTP (One-Time Password) on your registered mobile number. Enter this OTP to authenticate your identity.
Step 6: Select PF Advance (Form 31)
- After successful authentication, select 'PF Advance (Form 31)' as the claimed reason for your request.
Step 7: Fill Out Claim Form
- Fill out the required form with details such as the purpose for the advance, the amount required, and your address.
- Ensure all information is accurate and up to date.
Step 8: Submit Claim
- Review the filled form to verify all details.
- Once satisfied, submit the claim form through the Umang app.
Step 9: Claim Approval Process
- After submission, your claim will be forwarded to your employer for verification and approval.
- Your employer will review and approve the claim if all details are in order.
Step 10: Disbursement of Amount
- Once approved by your employer, the requested amount will be disbursed directly to the bank account linked with your UAN.
- Monitor your bank account to ensure the timely receipt of the disbursed amount.
PF Withdrawal Offline
Step 1: Download and Fill Forms
- Download Form 19 (for PF withdrawal) and Form 10C (for pension withdrawal) from the EPFO website or collect them from your employer's HR department.
- Fill out both forms accurately and completely. Include details like your name, PF account number, reason for withdrawal, bank account details, etc.
Step 2: Attach Necessary Documents
- Gather the necessary documents required for withdrawal, such as a canceled cheque from your bank account where you want the PF amount to be credited.
- Attach a self-attested copy of your PAN card or Form 60/61 (if PAN is not available).
- Ensure all documents are clear, legible, and attached securely to the forms.
Step 3: Submission to EPFO Office
- Once you have filled out the forms and attached the required documents, visit the regional EPFO office closest to you.
- Submit the completed forms and documents to the EPFO office staff or the designated submission counter.
- Obtain an acknowledgment receipt for your submission. This receipt will have a unique claim ID for reference.
Step 4: Processing and Approval
- The EPFO will process your withdrawal request after receiving your forms and documents.
- They will verify the details provided and check the authenticity of the submitted documents.
Step 5: Fund Deposit
- Once your withdrawal request is approved, the EPFO will initiate the fund transfer to your registered bank account.
- The withdrawn amount will be deposited directly into the bank account mentioned in your withdrawal form.
Step 6: Check Bank Account
- Keep track of your bank account to ensure that the withdrawn PF amount is credited without any issues.
- It may take a few days for the amount to reflect in your bank account, depending on the processing time of the EPFO and your bank.
Check the Status of Your PF Withdrawal Claim
- Log in to the UAN portal using your Universal Account Number (UAN) and password.
- Navigate to the 'Online Services' tab.
- Select the 'Track Claim Status' option.
- Enter the reference number provided to you during the PF withdrawal application process.
- The status of your PF withdrawal claim will be displayed on the screen.
PF Withdrawal Tax Rules
EPF withdrawal is exempt from tax if an employee has contributed to the EPF account for a continuous period of five years. However, if there is a break in contributions for five years, the EPF withdrawal amount becomes taxable for that financial year.
For EPF withdrawals made before completing five years of service and the withdrawal amount exceeds Rs. 50,000, TDS (Tax Deducted at Source) is applicable. The TDS rates are as follows:
If the employee provides their PAN card:
- TDS of 10% will be deducted on EPF withdrawal amounts exceeding Rs. 50,000.
If the employee does not provide their PAN card:
- TDS of 30% will be deducted from the EPF withdrawal amount exceeding Rs. 50,000.
However, no TDS will be deducted if the employee submits Form 15G/15H. Employees can download Form 15G from the EPFO portal or major banks' websites.
It's important to note that no TDS is deducted when an employee withdraws the EPF amount after completing five years of continuous service, regardless of the withdrawal amount.
|
EPF Withdrawal Duration |
Contribution Period |
Taxability |
TDS Rate (with PAN) |
TDS Rate (without PAN) |
TDS Waiver with Form 15G/15H |
|
Less than 5 years |
Less than 5 years |
Taxable |
10% |
30% |
Possible |
|
More than or equal to 5 years |
5 years or more |
Tax-free |
Not applicable |
Not applicable |
Not applicable |
PF Customer Care Contact Details
- PF Toll-Free Number: 14470
- PF Missed Call Number for EPF Details: 9966044425
- PF Balance Enquiry Number (SMS): Send "EPFOHO UAN" to 7738299899
- PF Email: employeefeedback@epfindia.gov.in
Conclusion
Utilizing your Employee Provident Fund (EPF) for a home purchase can be a strategic financial move, offering a way to leverage your savings for a significant life milestone. EPF withdrawals for home loans come with specific rules and guidelines set by the Employee Provident Fund Organisation (EPFO), ensuring that funds are utilized appropriately and responsibly. By understanding these rules, maintaining the necessary documents, and following the correct procedures for PF withdrawal, individuals can access their EPF savings to fulfill their homeownership dreams.
EPF, beyond being a retirement savings avenue, serves as a financial tool that supports employees during critical life stages, including buying a house, medical emergencies, education expenses, and more. Its tax benefits, coupled with the ability to withdraw for specific purposes like home purchases, make it a valuable asset in an individual's financial portfolio.
Overall, EPF withdrawal for a home loan can provide a practical and efficient means of financing your new home while ensuring financial stability and security in the long run. It's a testament to the multifaceted benefits of EPF as a tool for both retirement planning and achieving important life goals.
explore further
Latest from Home Buying Tips
More from Recommendations
Resources
