When and why can you withdraw from your EPF account

Employee Provident Fund (EPF) helps salaried people accumulate funds while they are earning for the period when the income stops. Hence, it is not supposed to be withdrawn before its maturity as this could jeopardize one's retirement. However, there are some special circumstances when subscribers are permitted to withdraw the money, partially or fully. Let us see what these circumstances are and the recent changes that have made withdrawal rules easier.

Loss of job, non receipt of salary

Earlier subscribers were allowed to withdraw the full balance in the EPF account and close the account if they remained unemployed continuously for two months. Today you can now withdraw up to 75% of the balance in the EPF account if you are without any employment for more than one month. This will allow you to retain the account and meet expenses while remaining unemployed,

Similarly, if you are employed but have not received any salary/wages continuously for two months for any reason other than a strike, you are allowed to take advance against the balance in EPF account.

In case of lockout or closure of the company for more than 15 days, and if you do not receive wages/salary, you can take advance against balance in EPF account.

While in employment you can take advance up to the amount of your own contribution and interest accumulated on such contribution. This facility can be availed any time without any requirement of completion of specific period of employment.

For buying home, land

For purchasing land for constructing own house, you can withdraw up to 24 months equivalent of your basic salary and Dearness Allowance (DA). For purchase or construction of a house, the eligibility goes up to 36 moths equivalent of salary and DA. However, the amount cannot exceed the employee's own contribution and interest accumulated on it. The total eligibility in both cases cannot exceed cost of the land or cost of construction or purchase price of the house. The assets need to be purchased in the name of either the subscriber or spouse or jointly by both.

You are also allowed to withdraw up to 90% of the balance in the EPF account, for repayment of your existing home loan, provided that at least 10 years contributions have been made and there is a minimum balance of Rs 20,000.

Illness, education or marriage

One can withdraw from EPF for the purpose of medical treatment of any member in the family including the subscriber. The amount is restricted to six months to six months of the basic salary and DA at the time of withdrawal and also restricted to your own contribution. You can avail this withdrawal facility for surgery or treatment of any disease which requires hospitalisation for more than one month. The requirement of hospitalisation for more than one month is a condition which is difficult to satisfy these days thanks to advancement in medical technology.

Similarly, you can withdraw from your EPF account for the purpose of marriage of any member in the family such as yourself, siblings and children as well as for meeting the educational expenses for children. The amount that you can withdraw for both purposes is restricted to 50% of your own contribution with interest accumulated thereon.

You can avail this withdrawal facility for both these purposes if you have contributed to the EPF for a minimum of seven years. Certificate from the educational institution where the child is going to pursue studies has to be submitted. You cannot avail this facility more than three time during the currency of the EPF account.

During one year before retirement

The EPF rules also allow you to withdraw up to 90% of the accumulated balances in your EPF account any time after you have completed 54 years of your age. This facility, however, can only be exercised within one year before the age of retirement or superannuation, as stipulated by your organisation. Once you retire from your employment you can withdraw the full balance any time and as much as you want.

WITHDRAWAL RULES

• Up to 75% from PPF account if you have no job, salary for more than one month
   
• For buying house, you can withdraw up to 36 months equivalent of salary and DA 
   
• For marriage, medical treatment of self and family members and education of children

The writer is a tax and investment expert