Friday, 18 October 2013

Premature withdrawal of EPF allowed in certain conditions

The employee’s Provident fund is a compulsory saving of an employee. A part of his or her salary will be deducted by the employer and deposit with any recognized Provident Fund Scheme or EPFO with management contribution. This fund is meant for the retirement financial needs of the employee. When retire the employee is supposed to survive with the fund money also. So normally no withdrawal is allowed from the fund. However, the employee is allowed to make any premature withdrawal of EPF under certain conditions and circumstances. Just know the circumstances one can make a premature withdrawal of EPF and the required documents thereof.

Marriage of self, siblings or Children

An employee can withdraw money from his EPF Account for his or her marriage, Marriage of their siblings or the marriage or their children. This withdrawal is allowed only after completing 7 years membership in EPF account.  The maximum amount of withdrawal is 50% of the total balance in PF account and this premature withdrawal of EPF is allowed only three times in the entire service period.  You should produce a marriage invitation card as the proof of marriage while applying the withdrawal.

Education of self or children

An EPF Member can withdraw money for the education of self or the children of the member. The same conditions of withdrawal for the marriage are applying for the premature withdrawal of EPF for the education also. But you must produce a valid copy of or a bonafide certificate of fees payable.

Medical Treatment

An employee can make a premature withdrawal of EPF account when there is a requirement of medical treatment of self, spouse, parents or children for a disease which require hospitalization for more than one month. There is no service length or frequency of withdrawal for this type or premature withdrawal. One can withdraw whenever he satisfies all these conditions. The maximum withdrawal amount is 6 times monthly salary or the total fund balances whichever is less. You should produce hospitalization certificate along with leave sanction from the employer and also should produce a certificate from ESI (Employees State Insurance) or employer which states that you are not getting ESI benefit. A certificate from the hospital which states the illness in specified format also should be submitted along with the application.

Purchase a plot

If you have completed 5 years of service with EPF membership you can withdraw EPF for purchasing a residential plot. The plot must be registered in the name of the employee or spouse or in the name of the joint family. The title of the plot must be clear and free from any legal issues and should be registered under the Indian Registration Act. Documents should be submitted to prove the same. The EPF member can make a premature withdrawal of EPF for purchasing a plot only once in his entire service period and the maximum amount allowed for withdrawal is 24 times monthly salary.

Acquisition or Construction of a flat or house

Premature withdrawal of EPF is allowed for the construction or purchase of a flat or house. In this case also the employee must complete 5 years of service. The property must be registered in the name of the employee, spouse or joint family. The maximum amount of withdrawal is 36 times salary and can make such a withdrawal only once in the service period.

Repayment of home loan

An employee can withdraw premature withdrawal of EPF to repay the housing loan once in the service period. The employee must complete 10 years service period and the house must be in the name of the employee or spouse of the employee or joint ownership of both. The maximum withdrawal of EPF is allowed is 36 times monthly salary.

Alteration or renovation of house

One can withdraw EPF prematurely to renew or make any alteration of the house once during his or her service period. The house must be in the name of the employee or spouse or with joint ownership. The employee must have completed 5 years of service and maximum 12 months’ salary can be withdrawn for this purpose.

Pre retirement withdrawal

An employee can withdraw 90% of his or her Total corpus after completing 54 years of age once during his or her service tenure.

An EPF member can withdraw a part of his or her EPF balance in any of the above mentioned circumstances. All the above cases relevant documents must be submitted for granting such withdrawal. But remember that the EPF amount is for the post retirement life, but in some emergencies one can utilise this money. Please also remember that the monthly salary in all the above cases means the salary which is used to deduct PF. Some cases it is limited to Rs. 6500 and in some other cases it is the sum total of basic and Dearness allowance.

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