Employee Provident Fund (EPF) helps salaried people accumulate funds while they are earning for the period when the income stops. Hence, it is not supposed to be withdrawn before its maturity as this could jeopardize one’s retirement. However, there are some special circumstances when subscribers are permitted to withdraw the money.

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Loss of job, non-receipt of salary

Earlier subscribers were allowed to withdraw the full balance in the EPF account and close the account if they remained unemployed continuously for two months. Today, you can withdraw up to 75% of the balance in the EPF account if you are without any employment for more than one month. This will allow you to retain the account and meet expenses while remaining unemployed,

Similarly, if you are employed but have not received any salary/wages continuously for two months for any reason other than a strike, you are allowed to take advance against the balance in EPF account.

In case of lockout or closure of the company for more than 15 days, and if you do not receive wages/salary, you can take advance against balance in EPF account. While in employment you can take advance up to the amount of your own contribution and interest accumulated on such contribution. This facility can be availed any time without any requirement of completion of specific period of employment.

For buying home, land

You can withdraw up to 24 months equivalent of your basic salary and Dearness Allowance (DA) for purchasing land for constructing own house. For purchase or construction of a house, the eligibility goes up to 36 months equivalent of salary and DA. However, the amount cannot exceed the employee’s own contribution and interest accumulated on it. The total eligibility in both cases cannot exceed cost of the land or cost of construction or purchase price of the house. The assets need to be purchased in the name of either the subscriber or spouse or jointly by both. You can also withdraw up to 90% of the balance in the EPF account, for repayment of your existing home loan, provided that at least 10 years contributions have been made and there is a minimum balance of Rs 20,000.

Illness, education or marriage

One can withdraw from EPF for medical treatment of self or any family member. The amount is restricted to six months to six months of the basic salary and DA at the time of withdrawal and also to your own contribution. You can avail this withdrawal facility for surgery or treatment of any disease which requires hospitalisation for more than one month.

Similarly, you can withdraw from EPF account for marriage of self, siblings and children, as well as for meeting children’s educational expenses. The amount is restricted to 50% of your own contribution with interest accumulated thereon.

For both purposes you should have contributed to the EPF for minimum seven years. Certificate from the educational institution where the child is going to pursue studies has to be submitted. You cannot avail this facility more than three time during the currency of the EPF account.

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During one year before retirement

You can withdraw up to 90% of the accumulated balances in the EPF account any time after you have completed 54 years. This facility, however, can only be exercised within one year before the retirement or superannuation. Once you retire from your employment you can withdraw the full balance any time and as much as you want.

By: Balwant Jain
(The writer is a tax and investment expert)

Source: DNA Money