Provident Fund Rules Changed For Paying Home Loan EMIs. Details In 10 Points

The government has amended the rules of the Employees' Provident Funds Scheme to enable over four crore subscribers to pay equated monthly instalments (EMIs) of home loans. They can also make payments towards purchase/construction of houses or purchase of land. This is part of the government's 'Housing for All' agenda. The Employees' Provident Fund Organisation (EPFO) is the retirement fund body that manages provident fund savings on behalf of employees. The government also recently announced other measures like Pradhan Mantri Awas Yojana (Urban) for middle-income groups to boost the housing sector.

Here are 10 things to know:

1) EPFO subscribes will be able withdraw up to 90 per cent of their accumulations in their provident fund accounts for purchase/construction of houses or purchase of land. (Also read: 8.65% interest on PF deposits to be credited soon)

2) To purchase a house under this new scheme, the subscriber has to be a member of a cooperative society or a society registered for housing purpose and such society should have at least ten members. The subscriber can also purchase the flat/house or land from the government or any agency under housing scheme or any promoter or builder.

3) The retirement fund body will make the payment for purchase of the property to the housing agency - not to the provident fund subscribers.

(Also read: Public Provident Fund rate at 40-year low. Can it fall further?)

Earlier, only those EPFO subscribers who had completed five years of service were allowed to withdraw provident fund savings for purchase of house/flat/construction including land. They were allowed to withdraw only 36 months of their salary (basic salary and dearness allowance) for this purpose.

4) The new rules also provide that that monthly instalments towards home purchase can also be paid from provident fund deposits.

5) The monthly instalments will be directly paid to to the government, housing agency, primary lending agency or the bank concerned.

6) The subscriber has to apply to the EPFO for availing the new scheme.

7) The withdrawal facility from the provident fund account will be available to only those members who fulfil certain conditions

8) The member should have contributed to the fund for at least three years.

9) The facility will be available only once to every member during his or her lifetime. The rule applies to all those who together with their subscriber spouse have at least Rs. 20,000 in their accounts.

10) If the member fails to get allotted a flat or in the event of the cancellation of an allotment, the amount so withdrawn has to be refunded in one lump sum within a period not exceeding fifteen days from the date of such cancellation or non-allotment.