Most of us extol silent workers. The EPF, or Employees’ Provident Fund account, works silently for you throughout the entire length of your working life. The social security programme is the earliest social security scheme for blue and white-collar employees alike in our country. The country’s planners legislated this scheme in 1952 and since then it has silently been helping generations people across different economic landscapes of India.
Every month the EPFO (Employees Provident Fund Organisation) takes away 12% from the basic salary and DA of an employee. It also takes a matching amount from the employers. While the entire amount of the employee contribution is put into the EPF account of the individual, only 3.87% from the employer’s contribution is invested in this account. The proceeds of this account is paid as a lump sum to the employee. The remaining 8.33% from the employer’s contribution is used to create an EPS (Employee Pension Account) account, the proceeds of which is used to generate a monthly pension for employees after 58, or 60 years.
Is it a good idea to withdraw EPF for a home loan
Fortunately for employees, though EPFO promotes the habit of not taking out any money during the pendency of the working life, it is not mandatory that an employee has to abide by it. There are a few financial emergency situations when an employee can withdraw funds early. One of these is to build a house or buying a house or a flat. Since housing is one of the basic necessities of life, this is allowed by the authorities. Money can be withdrawn also to liquidate home loans, if the employee has taken any.
The max limit for EPF advance for buying house
The rules state that any EPFO member can withdraw up to 90% of his/her EPF corpus if a home loan has to be paid off. However, the piece of real estate has to be in the name of the EPFO member singly or jointly. An employee has to complete a minimum of 3 years of membership of EPFO in order to be eligible for this withdrawal.
Withdrawals can also be made for buying a plot to build a house (max amount basic + DA of 24 months) to build a house. If one has to buy a ready flat or house, a maximum of Basic salary + DA of 36 months is allowed by the EPFO.
The Employees’ Provident Fund, or EPF, was designed for financial security for employees at the old age. However, the scheme designers were sagacious enough to make provisions for early withdrawal for momentous necessities. Personal Finance Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
