How do I withdraw PF for a home purchase?

The Provident Fund (PF) is a government-managed retirement savings plan for paid professionals. It is managed by the Employees Provident Fund Organisation (EPFO), which is part of India’s Ministry of Labour and Employment. PF is a monthly system in which both the employee and the employer contribute equally to the PF account, i.e. 12 percent of the base income and Dearness Allowance (DA). The Employee Provident Fund (EPF) scheme’s purpose is to give employees with a lump sum payment when they retire. Employees can, however, take the sum before to their professional retirement, subject to certain rules and limitations. For example, an employee can withdraw PF funds to buy land, build a home, or buy a house. There are, however, specified conditions that a homebuyer must meet in order to withdraw PF for a property.

What are the eligibility requirements for a PF withdrawal for a property purchase?

“Salaried professionals can withdraw the PF balance only after five years of work,” says Amit Goenka, Managing Director of Nisus Financial. The withdrawal limit is also determined by the purpose of the transaction. In the event of a land purchase, for example, an employee can withdraw either 24 months’ basic pay + Dearness Allowance (DA), or the amount limited to the real cost of the plot, whichever is less. In contrast, the amount withdrawn for purchasing or building a home will be either 36 months of basic income + DA or the actual price of the property or the amount necessary for construction, whichever is less.” The amount taken for a home purchase or construction of a house can be up to 90 percent of the PF balance, according to the newly inserted para-68BD in the EPF Plan, 1952. The PF withdrawal can also be used to pay down a house loan.

Take notice of the following:

  • If you remove your PF before five years after creating the account, it is taxed as ‘Income from Other Sources’. The withdrawn amount will be subject to a 10% Tax Deducted at Source (TDS).
  • With the exception of your spouse, the PF amount cannot be used to jointly purchase a home.
  • The PF amount may only be withdrawn to purchase a new home. It cannot be used to purchase a resale home.
  • By the age of 54, you can withdraw 90% of your PF.
  • Also, the development work must start within six months and terminate within a year following the last PF instalment withdrawal if the PF amount is withdrawn for house building or remodelling. In the event of a property purchase, the transaction should be completed within six months of the money being taken. The PF amount can be withdrawn in one or more instalments, as desired by the employee.

How can I get my PF money to buy a house?

  • In the case of a PF withdrawal for a property purchase, purchasers must follow the requirements outlined below:
  • Section 68BC of the EPF Scheme permits buyers who are members of a cooperative housing society or registered housing society (with at least 10 members) to withdraw the EPF sum.
  • Non-member salaried workers can also withdraw cash for property purchases in their individual capacity.
  • Key documentation, such as the commissioner’s certificate of PF contributions and composite claim forms, must be submitted by interested purchasers. A letter of authorization from PF to pay Equated Monthly Instalments (EMI) on a property loan.
  • Link your Aadhaar number to your UAN number for online PF withdrawal by visiting the official EPFO webpage.

Withdrawing Provident Funds Online Using A New Form

  • On the official UAN portal, update your Aadhaar number. Get Aadhaar authentication from your employer and link it to your UAN.
  • Fill out the withdrawal form on the EPF member portal.
  • Submit bank account information in accordance with the EPF account.
  • Submit the completed form, and the money withdrawn will be credited to your bank account within 15 days.

Withdrawing Provident Funds Offline Using the Previous Form

  • Form-19 may be downloaded from the EPFO website. Information is also available from your prior employer.
  • Fill in all of the essential information, such as the PF account number, job information, and bank account information, along with the IFSC code.
  • Send a cancelled check from the bank account for reference.
  • Send the completed form to your employer.
  • Your employer will sign and return the paperwork to the regional PF office for processing.

How do I use my PF balance to renovate my house?

  • Employees can withdraw monies from their EPF accounts for house restoration and reconstruction.
  • The residence should be in his or her name or jointly owned with a spouse.
  • The employee must have served for at least five years.
  • The member is permitted to withdraw 12 times his basic monthly income and DA.

Can you withdraw your whole PF balance for a property purchase?

Regarding the withdrawal of PF funds for a property purchase, the EPF Program has several limitations. An employee may withdraw either 24 months of basic income plus DA or the actual cost of the plot, whichever is less. The employee can withdraw 36 months of basic income + DA or the real price of the property or the cash necessary for construction to buy or build a concrete structure.

Although PF may appear to be one of the greatest methods to obtain financing for a house purchase, it is critical for homebuyers to understand the terms, circumstances, and repercussions of the procedure before deciding to use it.

Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.

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