EPF members could soon withdraw 90% of PF for down payment of loans

Don’t think you can afford to buy real estate? A new EPF amendment could change that in the future.


The government and rains have always been unpredictable in India.

Here’s the latest addition to the list of government surprises: You will soon be allowed to withdraw up to 90% from your Employee Provident Fund (EPF). This can be used for making down payments while buying homes.

Before understanding this further, here are some basics:


What is EPF?

EPF is a retirement benefit scheme offered to all salaried individuals. It encourages you to save a certain percent of your salary every month. Your employer contributes 12% of your basic salary every month to the EPF account, and you add a certain amount to the account as well. This money earns interest every year, eventually growing in the account. The fund becomes accessible only after retirement.

Related: Why ignoring to plan for retirement can be financially damaging

In the case of companies with less than 20 employees, the employer contribution is 10%; however the company has to meet certain criteria to be eligible for this.

Existing withdrawal rules

According to the EPF Scheme, 1952, salaried members are currently allowed to withdraw between 50% and 80% of their funds for certain purposes such as home loan repayment, medical treatment, marriage and unemployment, among a few others. However, these are subject to specific conditions, and require documentation proof to be applicable.

EPF members can withdraw up to 90% of the fund only after attaining 57 years of age.

Why is EPF making headlines?

The government has now planned to change the withdrawal rules, according to Labour Minister Bandaru Dattatreya. The news comes after a query was raised regarding the use of EPF money for housing schemes.

If this change comes through, you will be able to withdraw up to 90% of your savings from the fund to buy or construct a dwelling house or flat for yourself. The money can also be used for repaying monthly instalments on a home loan.

Related: Confused in Real Estate Investment? Here are 6 myths you can stop worrying about

However, to withdraw this money, you must be a member of a cooperative or a housing society, and such societies should have a minimum of 10 EPF members.

When will this be applicable?

For the moment, this is just a plan. The government still has to form a proposal to revise the law, which then has to be passed in Parliament. It is for this reason, the labour minister said that no targets have been set for this proposal.

However, if it does get implemented, the facility may only be extended to EPF members who fulfil the prescribed conditions.

What does the notification mean to the common man?

The proposed amendment can ensure your dream house will no longer be a distant dream. EPF could become an additional source of funds for you, enabling you to buy a house or make repayments of house loans with your PF money.

The proposed amendment could also bring some relief to the real estate sector, keeping in mind the adverse effect the note ban had on it. With more money at people’s disposal, the housing sector might see an increase in buyers.


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