The recent changes made by the government in the Employees’ Provident Fund (EPF) rules have come as a big relief, especially for salaried people who want to buy a house for the first time but have been finding it difficult to arrange for the down payment. Now, employees will be able to withdraw money from their PF account for the down payment, making the process of buying a house much easier than before.
New PF withdrawal rules for homebuyers
Now, EPFO members can use the fund corpus to facilitate their housing needs after 3 years of their EPF account opening. The newly added Para 68-BD in the EPF Scheme, 1952, allows EPFO members to withdraw up to 90% of the corpus lying in the EPFO account. This 90% withdrawal amount can be used for down payments or EMI payments, or the construction of a new house.
Earlier, the withdrawal of funds was allowed only after the completion of 5 years as an EPFO member. The maximum withdrawal limit was calculated as the total contributions of 36 months from the employee and the employer, along with the interest amount or the cost of the property, whichever was less. The rule also barred those from withdrawing funds if they happened to be members of any housing scheme.
Also read: EPF, NPS, PPF: How much should you invest in these schemes monthly to build a Rs 5 crore retirement corpus?
With Para 68-BD in the EPF Scheme, 1952, changing the norms, EPFO subscribers have more options now to use their funds. The biggest change the new rule has brought is the new time limit (from account opening) – allowing fund withdrawal after 3 years of account opening. However, the withdrawal facility for home buying is allowed only once in a lifetime for a member.
Experts believe that this change will not only boost demand in the real estate sector, but will also open the way for the middle class to turn their dream home into reality.
Impact of the change: Home purchase decisions accelerated
Abhishek Raj, founder and CEO of Zenica Ventures, calls it a “game-changer for India’s housing market”. According to him, “The biggest hurdle in the home buying journey has always been the down payment arrangement, especially for first-time salaried buyers. Now that people can use their PF savings,
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