A very significant feature of the EPF, or Employees’ Provident Fund, is that though it is designed essentially for the very long term – from the beginning of the working life of an employee till his/her retirement – an employee can withdraw funds before retirement in exceptional circumstances. The EPF was legislated in 1952 and draws on 12% of the basic salary + DA from the employee as well as a matching amount from the employer to create a pool of funds and a monthly pension after retirement.
These typically include the marriage of the employee himself/herself or his/her son/daughter/brother/sister; building/purchase of a house; medical treatment of the employee/family members; higher education of children etc. Let’s check all the situations and the maximum amount of money that an employee can seek to withdraw from the EPF account.
Types of advances that one can make from EPF
Purchase of house/flat/construction of house: 24 months basic + DA for purchase of land; 36 months of basic salary + DA for purchase of flat/house
Addition/alteration/improvement of house: 12 months basic salary + DA
Repaying principal, interest of home loan: 36 months basic salary + DA
Lockout/closure of employer firm for more than 15 days/employee not paid salary for 2 months: Entire employee share with interest
Dismissal/retrenchment of the employee challenged by employee in court: Maximum 50% of employee share with interest.
In case of firm’s closure for 6 months; employees have no job, no compensation: UP to 100% of employer share with interest
Medical treatment of the employee: 6 month’s basic salary + DA
Medical treatment of the employee’s family member: 6 month’s basic salary + DA
Marriage of the employee/son/daughter/siblings: 50% of employee share with interest
Post matriculation education of son/daughter: 50% of employee share with interest
Purchase of equipment for handicapped persons: 6 months basic salary + DA
Partial withdrawal before retirement: 90% of amount in EPF account (after 54 years of age)
Compensation in natural calamity: 50% of employee contribution or Rs 5,000 which ever is less.
EPF, or Employees’ Provident Fund is an instrument for ensuring financial security of an employee and his/her family after he/she retires from employment. However, one can make early withdrawals from the EPF account. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
