Are you planning to withdraw Provident Fund to purchase a house? Government is planning to cap premature withdrawal of provident funds at 75% of total amount.
We Indians contribute a significant amount of our earning towards “Provident Fund” in our service life. This amount surely comes handy when in need. Most people withdraw their full or part amount of PF for purchasing a flat or build a house. Right now you can withdraw almost 100% of the savings in PF account.
Existing rules for PF withdrawal for buying/construction a house/land:
If you are planning to buy or construct a house OR purchase a land, you are eligible to withdraw some limited money from your EPF account once in lifetime. Here are some of the rules which you need to satisfy
- The house should be on your name or your spouse name or jointly in the name of you and your spouse (no other combination is allowed).
- You should have completed 5 yrs of service.
- If you are purchasing land, the maximum permissible amount is 24 times monthly wages.
- If you are purchasing or constructing a house/flat , then the permissible limit is 36 times monthly wages .
- The property in question should be free from any dispute to avail this facility. Also the property should be registered and a proof of registration must be given to get this facility.
New proposal for PF withdrawal:
The government is planning to put a cap on premature withdrawal of provident fund (PF) money. The move is aimed at ensuring social security for workers in old age.
The Employees’ Provident Fund Organisation (EPFO) has proposed that an employee be allowed to withdraw only 75% of the overall kitty, instead of 100% as permitted under the existing Employees’ Provident Funds Scheme, 1952, in case of resignation from a job or for any other use before retirement. The change, once implemented, will impact working people who are planning to use it for either buying a house. Pre-mature withdrawal before retirement on these counts as well would also be restricted to 75% of the overall amount.
Government says that the provision of 100% withdrawal at any time is being misused to a large extent. The idea of a PF account is to ensure social security for workers in old age. The idea is to retain the worker in the PF net and ensure that the money saved under the PF account as social security for old age is used only in case of dire need and not as a savings bank account.
“The Logical Buyer” suggest that if you are planning to purchase a house and would like to withdraw PF money, you should consider doing it before new law comes in force.