Don't put your retirement at risk.
Don't touch your Employee Provident Fund (EPF) account until you retire.
Only when the circumstances leave you with ABSOLUTELY no other choice, that you may consider dipping into your EPF corpus.
In fact, except for a certain critical requirements, even the EPF rules do not allow premature advances or withdrawals. In other words, the EPF Act permits you early withdrawal
(a) only for specified purposes and
(b) only up to specified limits.
Summarized below are the key provisions in this regards.
1. For purchase or construction of a house.
- Minimum 5 years of membership is mandatory
- You can withdraw maximum 36 months of your Basic salary + Dearness Allowance OR total contribution (own + employer), including interest, whichever is lower
- Construction should begin within 6 months after 1st withdrawal
- Construction should be completed within 12 months of last withdrawal
- Property should be registered in the name of self or spouse or jointly with the spouse
New Rule added in April 2017: In order to promote housing for all, in April 2017 the Govt. added another clause to the EPF Rules for purchase or construction of a house wherein (a) only 3 years of membership is necessary and (b) Up to 90% of the amount in the EPF Account can be withdrawn PROVIDED that you are buying / constructing the house in a registered housing society and such a society has at least 10 EPF Accountholders.
2. For purchase of land
- Minimum 5 years of membership
- Maximum 24 months of your Basic Salary + Dearness Allowance OR total contribution (own + employer), including interest, whichever is lower
- Purchase should be completed within 6 months of withdrawal
- Property should be registered in the name of self or spouse or jointly with the spouse
3. For repayment of home loan
- Minimum 10 years of membership
- You can withdraw maximum 36 months of your Basic salary + Dearness Allowance OR total contribution (own + employer), including interest, whichever is lower
- Property should be registered in the name of self or spouse or jointly with the spouse
4. For addition / renovation of house
- Minimum 5 years of membership
- Maximum 12 months of your Basic Salary + DA OR only your own contribution, including interest, whichever is lower
- The house should be at least 5 years old and should be registered in the name of self or spouse or jointly with the spouse
- Another advance for home renovation permitted 10 years after the 1st withdrawal
5. For marriage / education expenses
- Minimum 7 years of membership
- For marriage of self, children and siblings
- For post-matriculation education of self or children only
- Maximum 50% of the own share of contribution to the EPF account, including interest, as on date
- Maximum three such advances are permissible
- Non-refundable advance
6. For medical treatment
- No minimum years of service stipulated
- For self and family including parents
- For specified serious illnesses (i.e. T.B., leprosy, paralysis, cancer, mental derangement or heart ailment), major operations or hospitalization exceeding one month
- Maximum 6 months of your basic salary + DA or only own share of contribution, including interest, whichever is less
- Non-refundable advance
7. For withdrawal one year before retirement
- After the age of 54 or one year before actual retirement whichever is later
- Maximum 90% of the amount in the EPF account as on date
IMPORTANT
I repeat... don't look at your Employee Provident Fund account at all... until retirement.
Some of the above requirements can be planned; while others happen unexpectedly. It would be prudent if you can plan for the foreseen requirements and insure against the unforeseen ones.
Only in rarest of the rare and exceptional situations, would I suggest that you prematurely withdraw money from your EPF Account.
This would be in your family's and your best interest to live a financially secure-cum-independent life post retirement.
NOTE
- While the advances against education / medical are non-refundable, unutilized amounts withdrawn for house purchase / renovation, plot or loan repayment have to be redeposited into the account
- Except for house purchase / construction or repayment of home loan where employer's contribution is also considered, in all other instances only your own contribution is considered for calculating your maximum eligibility
- Advance for house / plot / loan repayment are permitted only once
- Application has to be submitted in the prescribed form and supported by appropriate proofs and documents, if stipulated
Don't touch your Employee Provident Fund (EPF) account until you retire.
Only when the circumstances leave you with ABSOLUTELY no other choice, that you may consider dipping into your EPF corpus.
In fact, except for a certain critical requirements, even the EPF rules do not allow premature advances or withdrawals. In other words, the EPF Act permits you early withdrawal
(a) only for specified purposes and
(b) only up to specified limits.
Summarized below are the key provisions in this regards.
1. For purchase or construction of a house.
- Minimum 5 years of membership is mandatory
- You can withdraw maximum 36 months of your Basic salary + Dearness Allowance OR total contribution (own + employer), including interest, whichever is lower
- Construction should begin within 6 months after 1st withdrawal
- Construction should be completed within 12 months of last withdrawal
- Property should be registered in the name of self or spouse or jointly with the spouse
New Rule added in April 2017: In order to promote housing for all, in April 2017 the Govt. added another clause to the EPF Rules for purchase or construction of a house wherein (a) only 3 years of membership is necessary and (b) Up to 90% of the amount in the EPF Account can be withdrawn PROVIDED that you are buying / constructing the house in a registered housing society and such a society has at least 10 EPF Accountholders.
2. For purchase of land
- Minimum 5 years of membership
- Maximum 24 months of your Basic Salary + Dearness Allowance OR total contribution (own + employer), including interest, whichever is lower
- Purchase should be completed within 6 months of withdrawal
- Property should be registered in the name of self or spouse or jointly with the spouse
3. For repayment of home loan
- Minimum 10 years of membership
- You can withdraw maximum 36 months of your Basic salary + Dearness Allowance OR total contribution (own + employer), including interest, whichever is lower
- Property should be registered in the name of self or spouse or jointly with the spouse
4. For addition / renovation of house
- Minimum 5 years of membership
- Maximum 12 months of your Basic Salary + DA OR only your own contribution, including interest, whichever is lower
- The house should be at least 5 years old and should be registered in the name of self or spouse or jointly with the spouse
- Another advance for home renovation permitted 10 years after the 1st withdrawal
 |
| Don't eye your Employee Provident Fund, unless it is an absolute must. |
5. For marriage / education expenses
- Minimum 7 years of membership
- For marriage of self, children and siblings
- For post-matriculation education of self or children only
- Maximum 50% of the own share of contribution to the EPF account, including interest, as on date
- Maximum three such advances are permissible
- Non-refundable advance
6. For medical treatment
- No minimum years of service stipulated
- For self and family including parents
- For specified serious illnesses (i.e. T.B., leprosy, paralysis, cancer, mental derangement or heart ailment), major operations or hospitalization exceeding one month
- Maximum 6 months of your basic salary + DA or only own share of contribution, including interest, whichever is less
- Non-refundable advance
7. For withdrawal one year before retirement
- After the age of 54 or one year before actual retirement whichever is later
- Maximum 90% of the amount in the EPF account as on date
IMPORTANT
I repeat... don't look at your Employee Provident Fund account at all... until retirement.
Some of the above requirements can be planned; while others happen unexpectedly. It would be prudent if you can plan for the foreseen requirements and insure against the unforeseen ones.
Only in rarest of the rare and exceptional situations, would I suggest that you prematurely withdraw money from your EPF Account.
This would be in your family's and your best interest to live a financially secure-cum-independent life post retirement.
NOTE
- While the advances against education / medical are non-refundable, unutilized amounts withdrawn for house purchase / renovation, plot or loan repayment have to be redeposited into the account
- Except for house purchase / construction or repayment of home loan where employer's contribution is also considered, in all other instances only your own contribution is considered for calculating your maximum eligibility
- Advance for house / plot / loan repayment are permitted only once
- Application has to be submitted in the prescribed form and supported by appropriate proofs and documents, if stipulated
