EPFO alert! For a homebuyer, there are various sources from where one can fund the purchase or construction of a house – EPF (Employees’ Provident Fund) or PF (Provident Fund) is one of them. According to the Employees Provident Fund Organisation (EPFO), salaried people, who are contributing to their PF, have an additional avenue to fund their home buying. One can withdraw from the balance in the provident fund account, subject to certain conditions and within certain limits. The withdrawals can be used for various purposes like buying a plot of land or a house (ready-to-move-in or under-construction) or for constructing a house. The scheme also allows you to withdraw your EPF balance to repay your home loan.
Speaking on the EPFO norms in regard to EPF or PF withdrawal for home purchase Balwant Jain, a Mumbai-based tax and investment expert said, “An employee who has completed at least five years of contribution to his provident fund account, can withdraw money for the purchase of a plot and/or construction or purchase of a house. The amount can be withdrawn for the construction of a house on the plot of land owned either by you or by your wife, or jointly by both. The eligible amount of withdrawal would depend on the purpose for which you are withdrawing the money. For purchasing a plot, the amount available for withdrawal shall be restricted to 24 months’ basic salary and dearness allowance (DA). The amount of withdrawal, however, shall in no circumstances exceed the cost of the plot.”
Jain said that in addition to the withdrawal facilities available to the PF account holder individually, he or she can also avail of the withdrawal facility from its EPF account if it’s a member of a cooperative society or registered housing society. This withdrawal facility can be availed of, for buying land for constructing a residential house from government or any approved government agency. The same facility is also available for the purpose of purchase or construction of a residential house. For being eligible for this facility by virtue of being a member of society, society should at least have ten members.
On how much EPF or PF can be withdrawn for purchasing a house property or land Jitendra Solanki, a SEBI registered tax and investment expert said, “The maximum amount of withdrawal permissible under the EPFO norms is restricted to 90 per cent of the accumulated balance in one’s EPF account, subject, however, to the cost of asset to be acquired.” Solanki said that price of the property or 90 per cent of the EPF balance, whichever is less will be granted to the PF or EPF account holder for house purchase.