Employees’ Provident Fund (EPF) is a debt fund where after a lock in period of 5-10 years you will be able to redeem your investment. But due to its lock in period, many investors find it difficult to prematurely withdraw funds in case of any emergencies. Opting for loans like personal loan, home loan or a car loan may be their only option left. Now with financial irregularities present with the entire system, the interest rate is bound to fluctuate, creating uncertainty on your finances.
There are not many investors who know that, they can partially withdraw funds from their EPF accounts provided that they are for one of the following reasons:
For purchasing a property:
You can withdraw partially from your EPF account for the purpose of buying, renovating or for constructing your dream home. The amount can also be utilized for purchasing the land on which you plan to construct your house on. For making this possible it is important for you to be employed for at least 5 years and amend to all the rules and regulations laid down by the EPF authorities for this minimum period of 5 years. What this basically means is that, it is not necessary that you stick to a particular employer for 5 years but you need to regularly invest on the EPF for a minimum period of 5 years. So, if in case you are shifting from your current employer, make sure that you transfer your account as well.
For the purpose of constructing or buying a house, you are eligible to withdraw:
- Your basic salary along with your dearness allowance (DA) for a total period of 36 months.
- A total of yours and your employer’s share for 36 months can be taken.
- The amount involved in the total cost of construction.
From all of these above mentioned instances, only the option which carries the least amount will be considered and you can make the respective amount’s one time withdrawal.
Marriage or education:
If it’s the occasion of your marriage or your child’s or if the fund is required for funding your child’s education, then you have the possibility of withdrawing 50% of your total EPF contribution which also includes the interest. But what is important to note is that, you need to have been an EPF member for at least 7 years before requesting for such a withdrawal. You are also enabled to make 3 such partial withdrawals.
Loan repayment:
As specified in the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, you as an investor of the EPF are allowed to withdraw funds from the EPF to repay a home loan. You are in a position to withdraw your funds if it satisfies any one of the following requirements:
- Your basic salary including the Dearness Allowance (DA) of a 36 month period or
- The balance in your EPF account or
- Amount that consists of outstanding principal and interest.
The option, whichever is lower is considered, and you can make your respective withdrawals. Like the withdrawals for purchasing your property, this too is a onetime withdrawal provided that you have been an EPF holder for at least 10 years.
Paying medical emergencies:
In the scenario of urgent medical requirements, you are in a position to withdraw your funds from the EPF immediately. As an investor you are enabled to withdraw:
- An amount that is equal to six months of your basic salary including your Dearness Allowance (DA) or
- Your share along with interest
The amount that is the least will be considered. The medical emergencies for which this fund can be utilized is for the treatment of critical illness like paralysis, heart ailments, cancer, for performing surgical procedures or for medical emergencies that may result in hospitalization for a month or more.