Employees' Provident Fund Organization allows the subscriber to make a partial withdrawal or 'advance' withdrawal, from the PF corpus under certain circumstances.
One of them being- the prepayment of home loan. Withdrawal from the EPF account is also permissible in order to purchase/construct a house.
In accordance with Section 68-BB of the EPF scheme, withdrawal is permissible in case of repayment of any outstanding home loan of the employee investor or the spouse.
This means if an employee has availed a loan for the down payment of any house which is outstanding, he/she can utilize the EPF balance for repayment of such a loan.
For the purpose of repaying the outstanding home loan, the PF member is allowed to withdraw up to 90% of the corpus if the house is registered in his or her name or held jointly.
To withdraw the amount for home loan purpose, at least 3 years of complete service is required, according to EPFO.
The facility of PF withdrawal for this purpose can be availed only once in a lifetime.
If the PF withdrawal is made before the completion of the five years from opening the PF account, it is taxable under the law.
TDS (Tax Deducted at Source) is deducted at 10% on EPF balance if it is withdrawn before five years of service.
The EPF amount is also taxable if there is a break in the contribution to the account for five continuous years.
In order to apply for EPF withdrawal online, the subscriber must have an active Universal Account Number (UAN) and the mobile number used for activating the UAN number.
The UAN should be Know Your Customer (KYC)-verified by furnishing information such as Aadhaar, Permanent Account Number (PAN) and bank details.
The subscribers can put a claim for 'advance' withdrawal via EPFO's unified portal—unifiedportal-mem.epfindia.gov.in. Once approved, the amount is credited to the subscriber's account.
According to experts, it is not a good idea to withdraw the PF amount until retirement. EPF works on compounding and the corpus, if allowed to build up, can reap huge benefits.