Loan Against PF Last Updated : 09 Dec 2019

An individual having a PF account can withdraw funds from the account as loan. Partial withdrawal is possible in case the loan is towards buying/repairing a house. The employee should be in service for 5 years to be eligible to get loan against PF.

EPF Loan

Contributions made towards the EPF scheme helps employees to withdraw a good amount of money in a lump sum at the time of their retirement. However, employees are allowed to make partial withdrawals during the course of their employment and the money can be used as a loan in case of financial emergencies. However, a thorough verification is done by the EPFO to make sure that the application is valid. Only once the verification is successful, will employees be able to take an advance or a partial withdrawal against the EPF account.

Some of the reasons when employees can avail partial withdrawals are education, home loan repayment, house construction or renovation, etc. In case employees wish to avail any advances or loans, their Know Your Customer (KYC) details must be linked with their respective Universal Account Number (UAN).

Process to avail a loan

Withdrawals against the EPF account is more of an advance than a loan. Advances can be taken during the course of employment under certain conditions. Apart from the reason for the advance, the number of years of service that the employee has completed also plays a vital role. The advance form, Form 31, must be submitted with other required documents in order to avail a loan. The process to avail the loan can be completed on the EPFO portal. Employees must use their UAN login to the portal. However, individuals can login only if the UAN activation process is complete.

EPF Advance Rules

The main rules that must be followed in case EPFO members wish to avail an advance or a loan against the EPF account are mentioned below:

  • Depending on the category of PF withdrawal, the employee must have completed a certain number of years of service. The service period that the employee has completed in each organisation is totalled to calculate the overall service. However, the PF amount of the old organisation must be transferred to the new Member ID. Employees can use their UAN to complete the transfer of PF funds.
  • The amount of money that can be withdrawn also varies depending on the type of withdrawal. Based on the category, employees can withdraw up to 36 times their DA and basic salary.

Conditions when a loan can be availed

The EPFO has enforced certain rules so that individuals do not avail partial withdrawals or advances frequently. The main aim of enforcing these rules is for individuals to save money for their retirement. Given below are the conditions where advances can be availed against the EPF account:

Marriage: Given below are the conditions that must be met in case individuals wish to take an advance for the purpose of marriage:

  • Up to 50% of the employee’s contribution made towards EPF can be withdrawn.
  • The money can be withdrawn for the marriage of the EPF member, his/her children, and siblings.
  • The EPFO member must have completed at least 7 years of service.
  • Up to 3 withdrawals are allowed.

Illness: Given below are the conditions that must be met in case individuals wish to take an advance for the purpose of medical treatment:

  • In case the withdrawal is for the medical treatment of the EPF member, his/her spouse, parents, and children.
  • The employee’s entire contribution or 6 months DA and basic salary, whichever is lesser, can be withdrawn.
  • No minimum service period required.

Construction or purchase of a house: Given below are the conditions that must be met in case individuals wish to take an advance for the construction or purchase of a house:

  • EPFO members must have completed at least 5 years of service.
  • The property must be in the name of the EPFO member, his/her spouse, or jointly owned by them.
  • Only one withdrawal is allowed.
  • The total employee’s and employer’s contributions that have been made or 36 times the employee’s basic salary and DA, whichever is lesser, can be withdrawn.

Education: Given below are the conditions that must be met in case individuals wish to take an advance for the purpose of education:

  • Up to 50% of the contributions that have been made by the EPFO member can be withdrawn.
  • Up to three withdrawals are allowed.
  • Money can be withdrawn for post-matriculation education of the EPFO member’s children.
  • EPFO members must have completed at least 7 years of service.

Purchase of land: Given below are the conditions that must be met in case individuals wish to take an advance for the purchase of land:

  • EPFO members must have completed at least 5 years of service.
  • The property must be in the name of the EPFO member, his/her spouse, or jointly owned by them.
  • Only one withdrawal is allowed.
  • The total employee’s and employer’s contributions that have been made or 24 times the employee’s basic salary and DA, whichever is lesser, can be withdrawn.

Lock-out of the company: Given below are the conditions that must be met in case individuals wish to take a loan due to the lock-out of the company:

  • In case the company is closed for 15 days or more or the employee has not received the salary for two months or more.
  • An amount equal to the unpaid wages can be withdrawn. Only the employee’s share can be withdrawn. However, enough balance must be available in the account.
  • In case the company has been closed for 6 months or more, the employer’s share can also be used.

Unemployment: In case an individual is unemployed for a duration of 1 month, he/she can withdraw up to 75% of the EPF amount that is available. In case an individual is unemployed for a duration of 2 months or more, the entire EPF amount can be withdrawn.

Retirement: Up to 90% of the available EPF balance can be withdrawn by EPF members one year before their actual retirement or after they attain the age of 54 years, whichever comes later.

Status of the loan

Individuals who have applied for an advance or loan can check the status easily. However, individuals must have the PF account number in order to check the status. The status of the loan can be checked on the EPFO portal. EPF members who avail an advance need not pay back the money. However, EPFO members should only withdraw the EPF money as a last resort and save the money for their retirement.

FAQs

  1. What are the different types of withdrawal forms available on the Universal Account Number (UAN) portal?
  2. Given below are the three types of withdrawal forms available of the UAN portal:

  3. Do employees need to submit the form they have generated online for a claim to the employer?
  4. No, employees need not submit the form to their employers.

  5. In the case of the online filing of Form 31, what are the service requirements?
  6. The employee’s date of joining must be mentioned on the Employees’ Provident Fund Organisation (EPFO) portal to claim for partial withdrawals online.

  7. Do employees need to authenticate any claims they file online?
  8. Employees who file for a claim online will need to authenticate it by an OTP that is sent to their registered mobile number.

  9. What is the procedure for employees to claim for withdrawal online?
  10. Mentioned below is the step-by-step procedure to file for a claim online:

    • You will need to log in to the EPFO portal using your UAN and password.
    • You must make sure that your number of years of service and KYC details for eligibility are met.
    • Choose the relevant form for withdrawal.
    • You will receive an OTP on your registered mobile number. On entering the OTP, your claim will be processed.
  11. How long does it take for the claim to be settled?
  12. According to the Employees Provident Fund (EPF) scheme, settlement of a claim usually takes 20 days.

  13. Is it possible for employers to join the PF?
  14. No, employers are not allowed to join the PF.

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