EPFO members can now access and use their retirement savings to buy a home for themselves. It seems like the government is very effectively trying to fulfill the words ‘housing for everyone in next 5 years’. This is one of the main reasons behind the action that EPFO has allowed its members or contributors employees of the PF (provident scheme) to use their accounts for payments and for EMIs of home loans. Employees can now use up to 90% of EPF accumulations to complete the payments on houses or to pay the EMIs of home loans.
Also, there are some new rules in withdrawing the money for purchasing a home or a real estate property that the PF member must also be a member of a housing society which includes a minimum number of 10 members. Any of the employees who has been allotted a number as a PF member is then considered as a PF member by the EPFO.
The new rules are made for fulfilling of the existing rules for withdrawal of money from the provident fund by the employees for purchasing their homes. Also, it is essential information about the withdrawal that since the existing rules are considered as the important ones, one can withdraw funds according to his individual capacity even if he does not want to be a member of housing society after providing all the necessary documents in place. So, the PF member can avail a loan and can still withdraw funds to buy a house from the conditions and rules which already exist.
If one is the member then he can use the provident funds for various causes like the construction of a house, buying new plots, payments for home loans, paying EMIs for home loans. Also, the transaction can be made through any one of them like central government, private builders, and state government but there is a condition under which the member will be eligible for the scheme only if he has completed 3 years as a PF member.
No resale transactions
Any of the rules do not invigorate any kind of secondary market as well as the resale transactions regarding real estate properties. EPFO make payments directly to the state government, any housing agency, any builder, the central government in one or more installments in any case maybe.
Lump sum amount limit
The maximum limit of withdrawing the money is 90% of the PF account balance or the cost of acquisition of the property considering whichever is less. The balance of account includes the shares of contribution of the member plus the interest in addition and share of contribution of employee plus the interest. If the case is about constructing a house and the construction is done in the lower cost than prescribed and if the member does not get any allotment then the amount has to be refunded back to the EPFO within the time period of 30 days.
Paying EMIs through PF
According to new rules, a PF member who is also a member of a housing society can use the provident fund to pay the full payment or the EMIs for a loan in the name of the member after fulfilling the details in a given format. Also, there is now an easy option to repay the installments to society from the future contribution of the member in PF which was not at all available in the past. The installment or the EMI will be paid by EPFO to the bank or the government, as per the case.
Format of applying
If a member has already become a member of a housing society, then he can apply through housing society in a prescribed format for the completion of getting a certificate from EPFO.
Annexure I form
In the beginning, a form is issued in which the employees come to know about the deposits and balance made in the last 3 months, with the help of which EPFO determine about the EMI. Also, the employee has to mention the name and other details about the bank or any housing society to whom the certificate is being issued.
Annexure II form
After the first form, EPFO issue another form showing the balance and the amount deposited in the account in last 3 months.
Annexure III form
If any of the members is willing to use the PF account to pay the EMIs, then along with annexure I form, an authorization by the member is to be filled.
In the case of leaving a job
The clear sign has been made by the EPFO that if the employee leaves the service, the member is then completely responsible for repaying the loan. EPFO will not act as a third party in any case between the society and the member. EPFO will not be liable for any kind of payments then. Also, in the case of provident funds, the employee must arrange the funds on his own to complete the EMIs.
Already existed rules
According to the existing rules for purchasing of a house from any builder, the minimum time period of membership required is 5 years. Also, the limit of withdrawal from the PF account is wages of 36 months or the share of employee and employer plus interest or total cost, whichever is less.