Your contribution to EPF probably started right when you received your first salary. With the growing number of years of service, your EPF contribution coupled with the employer’s share also would reach a substantial amount. Can you touch it before you retire if you were cash strapped? The answer is yes. EPFO allows you the benefit of making partial EPF withdrawal as well as an advance withdrawal under special set of conditions.
Should You Withdraw Your EPF Before the Due Time?
EPF is usually associated with retirement. Although this mode of saving is slow and time taking, it comes in handy at the time when you need the most, i.e. when you do not have a fixed source of income. EPFO allows the option of an early PF withdrawal, however you should be careful to make this decision. This should be your last resort, when all other resources have been depleted. Once you have decided to apply for PF withdrawal, you will have to ensure you meet all the conditions set by EPFO. Only if you fit in the criteria for availing the benefit and provide all the obligatory documents, you can proceed with the application for EPF withdrawal.
When Can You Apply For Withdrawal?
You can apply for EPF withdrawal if you have served a minimum of 5 years of employment. However, the amount that is allowed to be withdrawn depends on the reasons for your withdrawal as well as the period of service. The total number of employment years are calculated based on the total duration of EPF contribution, either with the same employer or different. The duration doesn’t necessarily have to be continuous.
The number of times you can apply for this kind of withdrawal depends on various conditions. The various reasons that allow you to avail an early extraction of your PF are: marriage, medical treatment, education, home loan repayment, house repair or alteration, purchase/construction of house and lockout etc.
Conditions Allowed for Partial Withdrawal
Marriage is a huge financial responsibility and not everyone can manage adequate saving on their own. Extracting your EPF money can help you in overcoming this monetary hurdle. Be it your own marriage, your children’s or your own sibling’s marriage, you can make use of this facility. You will however have to complete a minimum of 7 years of employment in order to be able to apply for withdrawal for this purpose. The maximum allowed amount that can be taken out of your EPF is 50% of employee’s share at the time of withdrawal application. The number of times you can withdraw for the same purpose is three. You will have to provide the marriage invitation card, along with the application, which would serve as document of proof.
You can opt to draw your EPF to pay your medical bills for certain conditions. If you or your family member were to undergo a major operation or surgery; were hospitalized for a month or more or were suffering from a serious illness like cancer, TB, heart ailment, leprosy, paralysis or mental derangement, you could apply for an early withdrawal. There is no minimum duration of employment required to be served to avail this benefit. But is imperative that the medical condition is certified by a hospital or validated by a specialist doctor. You can withdraw your EPF amount any time and whenever you need treatment. The maximum amount that is allowed to be withdrawn is either the total employee’s share or six times of wages, whichever is lower in value.
Partial EPF withdrawal can also be useful to fund either your own, or your children’s education. With a minimum of 7 years of service, you can withdraw your EPF thrice in the entire duration of employment. In this case, the maximum amount that is allowed to be extracted is half of employee’s share. However, as proof you will have to present the Bonafide certificate stating the fees payable towards the education institution.
4. Home Loan Repayment
When you plan to buy a house/property either in your name, your spouse’s name or jointly, you can apply for an early PF amount removal. This amount can then be used to repay your home loan and relieve you of a great financial liability. However, you can only avail this benefit, if you have completed at least 10 years of employment. The maximum limit that you can draw from your EPF is 36 times of wages. A declaration signed by the member needs to be submitted along with the withdrawal application.
5. Purchase of Plot
As in the case of a property purchase, you are allowed to draw your partial EPF in advance only if it is either solely in your name, your spouse’s name or both names. The condition is that you should have completed a minimum of 5 years of service. The maximum allowed amount is 24 times of wages. As a document of proof, along with the application, you will have to submit a self-attested declaration as well as Purchase Agreement’s copy.
6. House Construction
You can partially withdraw your PF for purposes such as construction of a new house. Financial strength is crucial when you lay the foundation of the house you would dwell in. If the house you are constructing is in the plot which is in your name, your wife’s/husband’s name or both jointly and you have successfully contributed of EPF for 5 years, you can extract your PF to utilize it at this need of the hour. You are allowed a maximum of 36 times of the wages.
However, it is important to note that during your period of service, you can make partial EPF withdrawal only once either for home loan repayment or house construction or purchase of plot/site.
7. House Repair
If your house(either owned by you, your spouse or both together) needs some repair work 10 years after construction, you can extract your PF money for the purpose. If you have completed 5 years towards EPF contribution, you are permitted to receive maximum up to 12 times of wages. You will have to submit the proof of construction which is the construction completion certificate(Annexure XIII).
8. Addition/Change in the House
Sometimes you are required to add extra rooms in your house or change the direction of your kitchen, in such cases, the expenses can be heavy on your pocket. You can always look to draw your EPF at this point. As long as you have contributed to the EPFO for 5 years and the addition/change is required 5 years post construction of the house, you are allowed to apply for this withdrawal. Annexure III, which is the construction/utilization/completion certificate of the house, needs to be presented along with the application form.
You can only withdraw once either for the repair of the house or an addition/change in the house.
9. Company Lockout
If unfortunately your company shuts down and you do not receive any payment for at least 2 months and the company remains locked out for a minimum of 15 days, you can choose to apply for loan from EPF, as your last resort. There is no minimum number of years of service required in this case. You can extract your PF as long as there is adequate balance in employee contribution. If the company remains shut for more than 6 months, you are even allowed to draw the employer’s contribution. The maximum you can receive is 12 times of your wage. A declaration is needed to be provided as the document of proof.
10. Before Retirement
At times, there arises a need where you would want to use your retirement money earlier than your retirement age. There is no lower cap on the number of years of service for drawing your EPF earlier than its time. But you must be at least 54 years old to be allowed to apply for it. EPFO allows you this option of partial PF withdrawal one year before your retirement and this can be availed only once. As evidence of your date of retirement, you must present a certificate from the company you worked for. The highest amount that can be drawn for this reason is 90% of the total EPF(employee plus employer share).
EPF Advance – Abnormal Conditions
1. Physically Handicapped Members
EPFO grants advance to members for some other abnormal conditions as well. A member who is physically handicapped can apply for an advance withdrawal to use it for the purpose of buying an equipment to reduce the pain caused by handicap. There is no limit as to how many times you are allowed to apply for an advance withdrawal, as long as there is balance in your EPF, you can opt for it if need be. The maximum that is permitted to be extracted from EPF is six months’ basic wages and dearness allowance or employee’s share with interest or the equipment’s cost, whichever is the least in value. As proof, the document you would have to submit along with the application is a medical certificate from an expert medical practitioner stating the member is physically handicapped.
2. Natural Calamities
When nature strikes, her fury has no bounds. If you are one among those to be effected by an unforeseen natural calamity, you are most likely to be cash strapped. That is when your EPF fund comes in handy. You apply for it whenever you are faced with such a situation. You can attain up to Rs.5000 or half of employee’s contribution. Application must be sent within 4 months and should be attached with a certificate of damage issues by an appropriate authority/declaration from the State Government.
The two forms required for applying partial or advance EPF withdrawal are Form 31 and Form 31 Declaration.