The Employee’s Provident Fund organisation has allowed employees to make partial withdrawals from their accounts, and one of the reason an employee can do so is to buy or renovate one’s house. That said, making a withdrawal from the Employee’s Provident Fund to buy or renovate a house comes with a few conditions:
- Firstly, a withdrawal made towards buying or renovating a house can be made only after five years of complete service. Partial withdrawals in this case are free of tax.
- Secondly, the withdrawal for the house (either to buy or renovate) should be either on your name or your spouse’s or a joint ownership of the property.
- Next, once you have made a withdrawal to construct a house, the construction should begin within six months and end within twelve months from the point of making the withdrawal.
- To buy an already existing house or flat, the purchase has to be made within six months from the point of making the withdrawal.
- The same goes with refurbishing one’s house. One has to refurbish their house within six months of making the withdrawal.
- To begin the process of making a withdrawal from the Employee’s Provident fund for the purpose of buying or purchasing a house, one has to fill in Form 31 (the form to facilitate withdrawals from one’s PF savings) and submit the EPF declaration form – which states the reason why the employee is making a withdrawal. In this case, the reason would be to buy or renovate one’s house.
For the purpose of construction or buying a house or flat
For those employees who want to buy or construct a new house or flat, utilizing their savings in their PF can make the process a little easier. An employee is eligible to make a withdrawal towards this purpose when he/she has completed 5 years of complete service. The partial withdrawal is then tax-free. That said, this type of withdrawal from one’s PF savings can be made only once and the property should be under the name of the employee, his/her spouse or a joint venture.
For the purpose of repaying a housing a loan
For employees who want to advance the closure of their housing loan, they can do so by withdrawing their savings from their PF account. However, this can be done only once and the withdrawal can be made once the employee has completed 10 years of complete service. That said, the maximum withdrawal an employee can make to repay his/her’s housing loan is 36 times the current wages of the employee.
To purchase a site or a plot
Not just buying or renovating a house, employees can also make withdrawals from the PF accounts for the purpose of buying a site or a plot. An employee should have completed at least 5 years of complete service to avail this option. Yet again, the site or plot should be under the name of the employee or his/her spouse. Lastly, the maximum an employee can withdraw from their PF savings is 24 times the wages – which is their basic salary into 24. If an employee doesn’t have that much in their PF savings, the closest available amount can be withdrawn.
