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How to get EPF Money while working

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Contributions towards Employees' Provident Fund (EPF) are meant to take care of one's post-retirement needs. But you don't have to wait till you retire to lay your hands on it. The EPFO allows one to access one's EPF even during the course of employment. Such withdrawals are treated as 'advances' and not loans.


Such advances are allowed only under specific situations - buying a house, repaying a home loan, medical needs, education or marriage of children, etc. Also, the amount that you can take as an advance will depend on the specific situation, the number of years of service, etc. As it's not a loan, one need not pay any interest on such advances. Unlike a loan, it is not necessary to repay the advance.  
  
However, if the EPFO comes to know that any advance has been misused by the member, it will initiate full recovery of the amount, along with penal interest. Further, if a portion of the advance remains unused, it needs to be put back into the EPF account.

Availing advances
If you have your Know Your Customer (KYC) compliant Universal Account Number (UAN), which is activated and seeded to your bank account, you don't have to even go through your employer to get hold of your EPF. The UAN Based Form 31 (New) can be directly submitted to the EPFO. Else, you may fill in Form 31 and submit it to the EPFO through your employer.


Advance for buying or building a house or buying a site (plot of land)
From whom are you going to buy the house?
When it comes to getting an advance for buying or building a house or buying a site (plot of land), the EPFO has its own rules and eligibility criteria which will apply accordingly. The rules vary depending on whom you are going to buy the house from -- an agency, an individual (resale or secondary market) or a promoter. Before you approach the EPF ..

If you have bought the house from the central government, the state government, a cooperative society, an institution, a trust, a local body or a housing finance corporation, then it will be treated as a purchase from an 'agency'.  

If the house is bought from a promoter governed by the provisions of any Flat or Apartment Ownership Act, then it will be treated as a purchase from 'promoters'. Private builders will typically fall in this ambit.  

BUYING OR BUILDING A HOUSE OR BUYING A SITE (PLOT OF LAND)
Purpose : Buying a house
From: Promoter (Builder)
Payment to be made to (cheque in favour of): EPF member
How much: 36 months basic wages and Dearness Allowance (DA) or the total of employee and employer share with interest or the total cost of purchase of house, whichever is least.
Membership period required: 5 years
Number of times one can withdraw: Once 
Documents required: Form 31 and a declaration form  


Purpose : Construction of house on a plot owned by the member
From: Individual
Payment to be made to: EPF member
How much: 36 months basic wages and DA or the total of employee and employer share with interest or the total cost of building house, whichever is least.
Membership period required: 5 years
Number of times one can withdraw: Once
Documents required: Form 31 and a declaration form  

Purpose : Buying a site (plot) for building of house or buying of house
From: Individual (resale market)
Payment to be made to: EPF member
How much: 36 months basic wages and DA or the total of employee and employer share with interest or the total cost, whichever is least.
Membership period required: 5 years
Number of times one can withdraw: Once
Documents required: Form 31 and a declaration form

Purpose : Buying a site (plot)
From: Agency
Payment to be made to: Agency
How much: 24 months basic wages and DA or the total of employee and employer share with interest or the total cost, whichever is least.
Membership period required: 5 years
Number of times one can withdraw: Once
Documents required: Form 31 and a declaration form

Purpose : Buying a house/flat/construction
From: Agency
Payment to be made to: Agency
How much: 36 months basic wages and DA or the total of employee and employer share with interest or the total cost, whichever is least.
Membership period required: 5 years
Number of times one can withdraw: Once
Documents required: Form 31 and a declaration form

Purpose : For addition/alteration/improvement in house
Payment to be made to: EPF member
How much: 12 months basic wages and DA or the employee share with interest or cost, whichever is least.
Membership period required: 5 years
Number of times one can withdraw: Once
Documents required: Form 31 and a declaration form

Purpose : For second addition/alteration/improvement in house or repair of house
Payment to be made to: EPF member
How much: 12 months basic wages and DA or the employee share with interest or cost, whichever is least.
Membership period required: 10 years from withdrawal made above
Number of times one can withdraw: Once
Documents required: Form 31 and a declaration form



REPAYMENT OF HOME LOAN
Purpose : For repayment of outstanding home loan
From: Nationalised banks, registered cooperative society, etc.
Payment to be made to (cheque in favour of): Bank
How much: 36 months basic wages and DA or the total of employee and employer share with interest or the total outstanding loan principal and interest, whichever is least.
Membership period required: 10 years  
Number of times one can withdraw: Once
Documents required: Certificate from the agency indicating outstanding principal and interest.

MEDICAL NEEDS
Purpose : For self or family member's treatment
Payment to be made to (cheque in favour of): EPF member
How much: 6 months basic wages and DA or the employee share with interest, whichever is least.
Membership period required: No time period requirement. Advance allowed anytime
Number of times one can withdraw: Once
Documents required: Certificate C signed by Employer and Doctor.


EDUCATION/MARRIAGE NEEDS
Purpose : For marriage of self/daughter/son/ brother/sister
Payment to be made to (cheque in favour of): EPF member
How much: 50 per cent of the employee share with interest
Membership period required: 7 years
Number of times one can withdraw: Three
Documents required: Members declaration in Form 31.

Purpose : For post matriculation education of son/daughter
Payment to be made to (cheque in favour of): EPF member
How much: 50 per cent of the employee share with interest
Membership period required: 7 years
Number of times one can withdraw: Three
Documents required: A certificate regarding course of study and estimated expenditure from the head of the institution.


The working
Let's consider the house purchase scenario. Assuming someone has rendered five years of service and has a monthly basic salary of Rs 30,000. His 36 months salary equals to about Rs 10.8 lakh, while the total EPF contribution (total of employee and employer) equals about Rs 5.3 lakh. In this case, the employee can take up to Rs 5.3 lakh as an advance. Unless the employee is resorting to Voluntary Provident Fund (VPF) or chooses to withdraw a lesser
advance amount, his balance EPF balance (after withdrawal) will be almost nil.


Now, say someone has worked for 20 years and on the same basic salary, his 36 months wages equals to about Rs 10.8 lakh, while the total EPF contribution equals about Rs 42 lakh. Even if he withdraws Rs 5.3 lakh, the balance Rs 31.20 lakh will still be there for retirement.



Conclusion
Unless you have a plan in place to use your EPF as down payment for buying a house, do not jeopardise your retirement. It helps if you have a VPF as it creates a bigger corpus and you can then access it partially to fund your home dream.


 

 
 
 
 

 



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