PF Withdrawal to Buy a House

Bricksnwall Trusted Experts

Most salaried people are required to set aside a certain amount each month from their pay into a Provident Fund. This is seen as a rainy-day fund that may be taken out for personal use in specific situations. One such situation is the withdrawal of PF funds for property buying. Today, we examine the guidelines and process for PF withdrawal.

Recognizing the Provident Fund

The Employees Provident Fund Organization (EPFO) is in charge of overseeing the Provident Fund, a mandatory retirement program. A set monthly contribution is made to the employee's PF account by both the company and the employee. Together, these funds create a lump payment that is often taken out upon retirement. Employees may, however, also take money out of their PF to pay for building or home purchases.

Redrawing PF for a House Purchase: Requirements

It is crucial to understand the rules controlling PF withdrawal for property purchases before beginning the withdrawal procedure. Among these prerequisites are

Withdrawal Limit: The maximum amount that can be withdrawn from an Employee Provident Fund (EPF) to finance the purchase of a home is 90% of the balance.

Service Period: To be eligible for a PF withdrawal for a home purchase, you must have served for a minimum of five years.

Tax Repercussions: Your PF is taxable under the "Income from other sources" category and is subject to a 10% Tax Deducted at Source (TDS) if you withdraw it before serving five years.

Joint Purchase: You are the only one who may withdraw PF for a joint property purchase, excluding your spouse.

Ownership: You, your spouse, or both of you must be the sole owners of the newly built home.

Installments: Construction shall start within six months of the first withdrawal and be finished within 12 months of the last instalment. PF withdrawals must be made in installments.

Property Transaction: You have six months from the date of your online PF withdrawal to complete the property transaction if you are using the funds to purchase a home.

One-time Use: You are only permitted to withdraw PF for housing once in your lifetime.

Procedure for PF Withdrawal

The procedure for PF advance withdrawal for home purchase is as follows:

Qualification Standards: Verify that you fulfill the requirements to withdraw from PF. 

Record-keeping: A little paperwork is needed to withdraw PF for a house purchase. Among them are:

• A number of forms, including Forms 31, 10D, 10C, and 19,
• Most recent bank statement with two revenue stamps
• Proof of Address: utility bill, passport, Aadhaar card, etc.
• Identity verification: PAN, Aadhar, etc.
• Cancelled check for the desired amount to be received from the bank

Submission and Verification of the Form: Complete the form completely, then send it in with the previously stated papers. You can turn in forms with your employer or through the EPF portal. Applications are checked through and handled appropriately.

Fund Disbursement: Your bank account is immediately credited with the approved amount after the application has been processed.

Other Uses of Provident Funds

To purchase a home, EPFO allows you to take out a specific amount from your PF account in addition to the following:

• PF withdrawal for a residential building project. If an individual has worked for at least five years, they may take up to 90% of their PF.
• PF withdrawal for remodeling a house. A maximum of 12 times the base monthly compensation + DA is permitted.
• PF withdrawal for repayment of a mortgage. The permitted amount is equivalent to the basic wage plus DA for 36 months.

Umang App: Mobile App for PF Withdrawal

When it comes to PF withdrawals for home purchase, the Umang App is your one-stop shop. 

• Download the Umang App: Go to your favourite app store and download the Umang mobile application (Google Play Store or Apple App Store).
• Use EPFO Services: Launch the Umang app, select "EPFO Services," then click "Raise Claim."
• Give UAN: Choose the kind of withdrawal and input your Universal Account Number (UAN). After receiving the OTP on your registered mobile number, enter it.
• Send in your application: After selecting "Submit," take note of the reference number your application was assigned.