Home Purchase PF Withdrawal : Process, Regulations & More
Home Purchase PF Withdrawal : Ever thought about using a PF withdrawal to pay for your new house? That is, in fact, a practical and simple choice. Continue reading to discover more about pf withdrawal.
The organisation of your funds turns out to be one of the most important concerns when you want to buy a new house. While some homebuyers utilise extra cash or savings, others apply for a house loan to purchase their ideal residence. There is one intriguing, little-known method of financing a property, though. The money from the provident fund or a withdrawal from it is used. One must, however, be familiar with PF withdrawal.
For those who are unfamiliar, EPF stands for Employee Provident Fund, often known as Provident Fund (PF). The money saved up in a provident fund might come in very handy for homebuyers who are trying to finance a purchase. The guidelines for provident fund withdrawal state that PF withdrawals are permitted for the purchase, building, or repayment of a home loan used to finance a property purchase.
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Let’s investigate this issue a bit more.
What is PF or Provident Fund Account?
For salaried workers, the government manages the Provident Fund retirement programme. In the Provident Fund system, both the employer and the employee make contributions to the employee’s PF account. Equal amounts are donated by the company and the employee. A 12% payment to the provident fund is made on top of the base wage and daily allowance. (Online PF Withdrawal)
The Provident Fund (PF)’s main goal is to give the employee a lump sum payment upon retirement. However, in accordance with the PF withdrawal regulations, this accumulated wealth may be taken early in several circumstances, such as when purchasing a home or building a house, purchasing land, or repaying a mortgage.
What are the conditions for PF Withdrawal for Home Buying?
Even though individuals are aware of PF withdrawal, how exactly does one go about doing it? The primary goal of the provident fund system was to give salaried workers a reliable retirement fund. The collected money can, however, be taken out to buy a dwelling. You can use UAN login (pf withdrawal login) to check the EPFO member passbook and the EPFO balance.
An employee is qualified for PF Withdrawal for the purpose of purchasing a house, plot, and building a house in line with the recently added clause number 68BD in the “Employees Provident Fund Scheme” 1952 regulations of pf withdrawal. (Online PF Withdrawal)
PF Withdrawal for Purchase of Plot
The PF Withdrawal will be equal to 24 months of Basic Salary plus the employee’s Dearness Allowance (DA), or the cost of the plot, whichever is smaller, if a salaried individual wants to buy a plot to build a house.
Withdrawal of PF for a completed home
If someone wants to take a PF withdrawal to pay for a ready-made home, the amount will be equal to 36 months’ worth of their basic salary plus their Dearness Allowance (DA), or the price of the home, whichever is lesser.
PF Withdrawal for House Renovation or Repair
A person may take up to 12 months of their basic pay, their Dearness Allowance (DA), or the cost of repair work, whichever is smaller, if they choose to renovate their house or other property through a PF withdrawal. (Online PF Withdrawal)
The PF Withdrawal for House Construction is Subject to Certain Conditions.
Other Motives for Withdrawing PF
Let’s look at some of the causes of PF Withdrawal now that we understand how to accomplish it. In addition to house purchases and renovations, the following situations allow for PF withdrawal:
- A individual is now eligible to retire.
- A female worker is leaving her position owing to a marriage, pregnancy, etc.
- If someone is moving to another nation
- If a person has been jobless for more than two months or 60 days
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The requirements for withdrawing PF for house construction
Although the Provident Fund is a great alternative for financing the property purchase, there are a number of restrictions on PF withdrawals that must be adhered to. The usual prerequisites for PF withdrawal for a property purchase are listed below.
- The PF withdrawal will be limited to 90% of the EPF balance, regardless of whether it is for a land acquisition, ready-to-move property, or repairing and renovating an existing property.
- Only those with at least five years of employment can withdraw their PF benefits.
- The PF withdrawal will be subject to taxation under the legislation if it is done before the PF account has been open for five years. The ‘Income from other sources’ category will apply to tax this withdrawal. The withdrawn amount will be subject to a TDS at a rate of 10%.
- It should be remembered that everyone else outside your spouse is not eligible for the PF withdrawal for joint purchases.
- The newly constructed home must be owned by the employee, their spouse, or both of them jointly.
- It is required to withdraw PF in installments. Additionally, it must be verified that the house’s construction starts no later than six months after the first installment is withdrawn. Additionally, the building must be finished within a year of the final sketched installments.
- If you’re using PF withdrawal money to purchase real estate, you must make sure the sale of the property is finalised within six months of the date of the online PF withdrawal.
- Only one PF withdrawal is permitted per person per lifetime for housing-related expenses.
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Construction of a Home by a Cooperative or Housing Society Member
Along with the aforementioned benefits, the EPFO permits a member of a registered society or housing society to withdraw PF funds for the purchase or building of a home or a plot of land. Let’s examine the specific guidelines for pf withdrawal for building homes.
A member of a registered society or housing society (with a minimum of ten members) will be able to withdraw the Provident Fund balance for the purchase or building of a home in accordance with section 68BC of the EPF plan and regulations of fund withdrawal. The purchase of land for a house’s building is also permitted with the PF Withdrawal.
The central government, the relevant state government, or a licenced agency may be the source of this plot acquisition. There is a restriction on using this facility, though. In such circumstances, the Provident Fund withdrawal shall be equal to the lesser of 90 percent of the Provident Fund balance or the actual cost of the property acquired. (Online PF Withdrawal)
There is one more important criteria that is related to this form of online PF withdrawal in addition to this clause.
The employee must have completed at least five years of employment and contributions to his PF fund in accordance with the criteria of pf withdrawal. Additionally, the spouse who is also a member’s part of the contribution with interest in the PF balance cannot be less than Rs 20,000. In this instance, it is crucial for the PF withdrawal.
PF Withdrawal for Home Loan Repayment
The PF withdrawal or PF balance may also be used to pay the mortgage, under the PF withdrawal regulations. The PF balance may be withdrawn and used to pay the outstanding debt obtained by the member or his or her spouse in accordance with section 68-BB of the EPF system.
Such withdrawals, however, will only be allowed up to the equivalent of 36 months’ worth of base pay and dearness allowances (DA). Additionally, to be eligible for this choice, the employee must have served a minimum of 10 years in the company.
Moreover, the home loans availed in this case must have been availed from registered financial institutions with the
- State government
- Public Financial Institutions
- Non-banking Housing Finance Companies
- State Housing Boards
- Municipal Corporations
Home Purchase PF Withdrawal : Online PF Withdrawal
By filing a Composite Claim Form at the EPFO office, one can withdraw their PF offline. The Composite Claim Form is accessible at the closest EPFO office and comes in Aadhaar and Non-Aadhaar varieties. (Offline PF Withdrawal)
- Composite Claim Form (Aadhar Form): When an Aadhar card and bank account are linked to a UAN account, an Aadhar form is utilised. You won’t need the employer to provide any attestation in this situation.
- If Aadhar and bank information are not linked to a UAN account, a composite claim form (non-Aadhar form) is utilised. You will need to have the employer certify it.
You should turn in the completed form to the EPFO office. If you can’t recall or can’t find your UAN number, the identical procedure will be carried out.
How to do PF withdrawal for home buying online or PF withdrawal online?
A person can easily apply online for the PF withdrawal for housing purposes. Follow the mentioned steps to apply for PF withdrawal online.
- Step 1: Log in (pf withdrawal login) to the official portal of EPFO and link your Aadhar number with your Universal account number or UAN.
- Fill in the PF withdrawal form online.
- Submit the personal and bank account details.
- After departmental checks, the amount will be credited to your account within 15 working days.
Finalisation of PF withdrawal for home purchase
In conclusion, the PF withdrawal for a home purchase is a great option for financing your property acquisition. However, it is urged that you must carefully weigh your options before considering utilising your provident fund for housing. This fund should only be used as a last resort to finance your home.
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