New EPF rules allow for early withdrawal for property acquisition


A new amendment to the Employee Provident Fund (EPF) scheme enables over 4 crore Indians to do what their salaries ideally should have – to pay off their EMIs on home loans/make payments towards acquiring property or construction expenses on new residences. The government’s ‘Housing for All’ program aims to boost the housing and real estate sector across income groups, and the amendment to the EPF rules is a move in that direction.

The Employee Provident Fund Office (EPFO) is the body charged with the collection and distribution of provident fund savings among the working Indian population.

A quick look at some of the new features of the recent amendment should shed some light on the government intentions as well as the possibilities for home buyers:

  1. Up to 90% of the total accumulated savings in the PF account can be withdrawn by subscribers for the express purpose of construction of a residential house/purchase of land or residential house.
  2. In order to be eligible for the scheme, the subscriber/home buyer must belong to a minimum-10-member strong cooperative society which has been registered for ‘housing’ purposes.
  3. The subscriber will not directly receive any of the funds in his/her respective EPF account, instead the funds will be transferred to the housing agency and used to pay off the purchase price.
  4. EPF deposits can be redirected towards EMI payments.
  5. The new scheme can be availed only after applying at the EPFO.
  6. The scheme can be used only if the subscriber has deposited funds in the EPF account consistently for the last 3 years.
  7. EPF withdrawals will be possible only for those individuals who ‘fulfil certain criteria’ which hasn’t been officially communicated yet.
  8. In case the allotment of the property/flat/land/building/house is cancelled, all withdrawn funds must be deposited back to the EPF account within 15 days of non-allotment/cancellation notification.



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