Yes, you can take a loan from the EPF account. The best part is that you don’t need to return it.
You can withdraw the partial amount from the EPF during the job. However, you should take out money from this corpus as a last resort.
It can’t be used as any other personal loan. Your reason for PF withdrawal should be genuine. PF office verifies your application thoroughly.
It is not easy to get money from EPF. There is much documentation and a waiting period. Disapproval is common with the premature PF withdrawal.
If you really need money and you want to compromise your retirement corpus, then you can go ahead.
When Can You Take Loan From EPF
Every person has different priorities. For you, buying a tablet can be the most important thing. But, EPFO will never give money for this. It has set rules for premature PF withdrawal. You can get money from EPF only for these 9 purposes.
You can withdraw from PF for higher education of self, son, daughter, brother or sister.
Marriage can be also the reason of PF withdrawal. You can get money for the marriage of self, and your son, daughter.
3. Medical Treatment
Medical treatment is costly today. You can get money for it from Provident fund. But the illness should be serious. You can withdraw the amount for the treatment of spouse, son, daughter, dependent father or mother.
4. Purchase of Home or Plot
Purchase of home or plot is asset creation and it requires a big amount. The PF can be used for this. However, there are different rules for plot and home. I will detail it later.
5. Home loan payment
The home loan can be also paid by using PF.
6. Addition/Alteration of House
The provident fund can be also used for the alteration, repair or addition in existing home. EPFO discourage the PF withdrawal for these cases.
Natural calamity can incur huge loss. In such cases, you can withdraw from provident fund.
In a lockout situation, you may not receive the salary. To carry on your regular expenses, you can withdraw PF.
9. Withdrawal Before The Retirement
You can withdraw the majority of your corpus before one year of the retirement.
Minimum Service Limit For EPF Loan
Did you find yourself eligible for partial withdrawal of EPF? Do you have one of the above reasons? Yes? Still, you may not get the PF money. There is minimum service condition for each cause.
No Minimum Service Limit
- Medical Treatment
- Pre Retirement
Minimum 5 Years of Service
- Home or Plot Purchase
- Construction of House
- Alteration or Addition in Home
Minimum 7 Years of Service
Minimum 10 Years of Service
Home Loan Repayment
Rules of PF withdrawal Before Leaving The Job
You can withdraw the PF money if you leave the job and remain unemployed for 2 months. Even in some circumstances you can get PF money just after leaving the job. But To Withdraw amount from EPF during the job, you have to fulfill many conditions.
- You have to fulfill the minimum service need. The best part is the duration of the service is total. Duration of each job is added to this calculation, given you have transferred your PF accounts to the new job. Now you can transfer the PF amount easily with the introduction of UAN.
- There is a limit on the amount you can withdraw. It can be up to 36 times of your wages (basic+DA). The maximum amount for withdrawal depends upon the reason of PF withdrawal.
- You need to give proof of the reason you have mentioned.
Let us see the conditions of partial PF withdrawal for each purpose.
PF Withdrawal For Marriage
You can withdraw from the EPF account on the occasion of marriage. The marriage can be of yourself, sister, brother, son or daughter.
The minimum service period for this advance is 7 years.
You can withdraw up to 50% of the total employee contribution.
You can use this reason 3 times in your life.
Marriage invitation card along with the application should be submitted through the employer .
PF Withdrawal For Education
You can withdraw fund for the education of self and children.
You should have completed a total service of 7 years.
You can get up to 50% of the employee contribution.
This option can be used 3 times in a lifetime.
You should attach bonafide certificate duly indicating the fees payable from the educational institution.
PF Advance For Medical Treatment
You can take an advance from PF account for the treatment of self, spouse, children and parents.
There should be hospitalization for more than a month. If the claimant is an employee, he should have taken leave from the organization.
You can avail advance in case of TB, leprosy, paralysis, cancer, mental derangement or heart ailment without the hospitalization.
You have to give the certificate from the doctor stating the hospitalization need. In case of above mentioned disease you need to give the certificate from specialist doctor.
You can take 6 times of wages (basic+DA) or total employee share, whichever is less.
There is no limit on the frequency.
Purchase Home or Construction Using PF Money
Buying home or plot is one of the most important decision of life. We invest most of our savings on this. But do you want to compromise with your retirement years. Think about this before applying for PF withdrawal.
You can withdraw from PF for the purchase of a home or construction of the house only once.
You must have completed 5 years in service.
Property should be registered in the name of self or jointly with spouse
There should not be any joint owner of property other than the spouse.
You can get 36 times of wage (basic+DA) for this purpose.
You need to give a filled declaration form with the application.
EPF Loan For Buying A Plot
PF money can be also used for buying a plot.
You can avail the withdrawal facility for purchase of plot only once.
You must have completed 5 years in service.
There should not be any co-owner of the property other than the spouse.
You can get 24 times of wages (Basic +DA).
You need to give a copy of the purchase agreement.
You should give a declaration with the application.
Alteration Or Addition In The House
You must have completed 5 years in service.
At least 5 years after the construction of house.
You can get 12 times of wages.
Property should be owned by you or jointly with the spouse.
Only once in service.
Alteration proof is required.
Repair of House
All the condition is similar to the alteration of house except you have to wait at least 10 years after the construction of house.
Lockout Of The Company
If you are not getting wage for last two months and your company is locked out or closed for at least 15 days, you can take a loan from EPF.
You can get the amount equal to your unpaid wages.
There must have balance in employee contribution. You can check your PF balance through various methods.
If closure has been for more than 6 months, you can also use the employer’s contribution. (Do you wait for such a long time 😉 )
Withdrawal Prior To Retirement
You must have completed 57 years of age
Retirement should be after one year.
You can get up to 90% of the total provident fund balance.
You need to give a certificate from the employer stating the date of retirement.
In Case Of Calamity
There is no condition of minimum service.
You have to give certificates of damage from competent authority.
You can get up to 50% of the employee share.
No other condition.
The Form And Process of Applying for PF Advance
Now, you have very easy way to partially withdraw the EPF amount. The EPFO has come with a simple new EPF withdrawal form (new). This form requires very few information
The best thing about this form is that it does not require the approval from the employer. Yes! You can directly submit this form to the regional PF office. But to use this easy facility, you need UAN activated and Aadhaar linked.
Time To Get The PF Advance
The application submitted through the first method would take less time. You can expect money within a week. But the second method can take upto one month. It depends upon your employer’s promptness. Some regional PF offices take more time.
You can check the status of claim through the EPFO website.
If you want to dig deep about the PF advances, read this PDF of EPFO. Section 68 deals with Advances and withdrawals.
How will I repay
The withdrawal from PF is an advance, not a loan in a true sense. Hence, you need not to pay it back.
In case you could not use the total advance, you can refund the remaining amount through the employer. The amount should be refunded within a month.
I will use the PF money only as a last resort. Only in the dire situation I will take a loan from EPF. What do you think, should we take out PF money because the EPFO is slow and there may be some fraud? Should we avoid putting money with EPFO because we get less interest? What is your take? Let us discuss.