EPFO allows subscribers to withdraw up to 90% of funds for home buying

The government has amended the rules of the Employees' Provident Funds Scheme to enable subscribers to withdraw up to 90 per cent of their accumulations in their provident fund accounts for housing purposes.

The corpus can be used to make payments towards purchase / construction of houses or purchase of land or to pay equated monthly instalments (EMIs) of home loans.

This is part of the government's 'Housing for All' agenda. The government has also announced other measures like Pradhan Mantri Awas Yojana (Urban) for middle-income groups to boost the housing sector.

The Employees' Provident Fund Organisation (EPFO) is the retirement fund body that manages provident fund savings on behalf of over 40 million employees. As per the amended rules:

EPFO subscribers can withdraw up to 90 per cent of their accumulated PF accounts for purchase/construction of houses or purchase of land;

For purchase of a house under the scheme, the subscriber has to be a member of a cooperative society or a society registered for housing purpose and such society should have at least ten members;

EPFO will make the payment for purchase of the property to the housing agency - not to the provident fund subscribers;

The new rules also provide that that monthly instalments towards home purchase can also be paid from provident fund deposits.

The monthly instalments will be directly paid to the government, housing agency, primary lending agency or the bank concerned;

The subscriber has to apply to the EPFO for availing the new scheme;

Withdrawal facility from the provident fund account will be available to only those members who fulfil certain conditions;

The member should have contributed to the fund for at least three years;

The facility will be available only once to every member during his or her lifetime. The rule applies to all those who together with their subscriber spouse have at least Rs20,000 in their accounts; and

If the member fails to get allotted a flat or in the event of the cancellation of an allotment, the amount so withdrawn has to be refunded in one lump sum within a period not exceeding 15 days from the date of such cancellation or non-allotment.

Earlier, only those EPFO subscribers who had completed five years of service were allowed to withdraw provident fund savings for purchase of house / flat / construction, including land. They were allowed to withdraw only a maximum amount equivalent to 36 months of their salary (basic salary and dearness allowance) for this purpose.