Feeling short of money to modify your existing house? Are you tired of your wife’s taunts to improve your house? Then why to worry when you have EPF in your hand? Yes, you saw it right. You can go for EPF withdrawal for improving/modifying the existing house. Let’s know how to proceed!
Why Go For EPF Withdrawal For Improving/Modifying Existing House?
Earlier, in EPF, it was added to include the EPF withdrawal for a home loan. Everyone reading this can relate to how important it is to renovate the existing house. Every existing house needs modification after a certain interval of time. The modifications can be in the form of wall rebuilding, house colouring, changing wires, changing designs, construction of pillars, etc.
For these activities, one needs capital. Plus, taking loans for such a cause would be foolhardy. So, it’s better to think of any other way out. When EPFO exclaimed it’s this improvisation, its users enthralled with joy. These rules are at work since 12th April 2017.
So, let’s know more about how to go for EPF Withdrawal for improving/modifying existing house.
Eligibility Criteria For EPF Withdrawal For Improving/Modifying Existing House
Well, there are two criteria under this improvisation-
1. You must be an active EPF subscriber for at least 10 years.
2. The house you’re going to improve/modify should be at least 5 years. However, on the safer side wait for it to turn more than 5 years.
3. Last but the most important point to consider, the house you’re going to modify must be in your or your spouse’s name. Otherwise, it must be joint property. If the house is in the name of someone else, you shall not get any opportunity to extract from your EPF.
Thus, if anyone’s criteria doesn’t fulfil from this, you’re debarred from receiving any financial aid from your EPF fund
Amount Of Money You Can Withdraw From EPF For Improving/Modifying The Existing House
The amount of money you can extract clearly depends on your monthly wages. Didn’t get it? Wait, I’ll show you how.
i. You can get an amount which is up to your total salary of a year added up with your DA.
There’s another point to it as well-
ii. The amount that you devotes towards your account accrued up with interest. That is, the employee’s devotion with the added up interest.
iii. The total cost of the expenditure is set to get renovated.
Of the above three-set basis, the one that goes for the least amount gets chosen. Your understanding will be more clear with an example.
For example, your monthly wage is Rs. 50,000. Counting up to yearly, it becomes Rs. 50,000*12= Rs. 6 lakh. Considering the other situation, we know the employee’s share to your account is 12% of your monthly wage, including the DA. Let’s say this has Rs. 15,50,000. I’m not going for calculation since you might have withdrawn before for any other cause. Thus, the exact amount cannot get calculated with this information. Then comes the last option, i.e., the total cost of modification. Let’s say it adds up to be around Rs. 1.7 lakh.
Thus, here, Rs. 1.7 lakh is the least one. So, you can extract this amount from your EPF fund. Yet, for calculating the total expenditure of modification, you need to add up the average cost of your modification.
Frequently Asked Questions
1. Can I withdraw EPF for a house renovation?
Yes, certainly, why not. There’s a provision under EPF extraction for house renovation. You can extract from your EPF fund about twice in total. You can get your first extraction when your house completes a 5th old anniversary. While the next one follows after it completes its 10th anniversary. Thus, you can avail of this opportunity only twice in your lifetime.
Added to that, you or your wife must be the legal owner of that house. Otherwise, it must be joint property, in your and your wife’s name.
2. How do I transfer my old PF account to a new one?
You might be changing your job or shifting to another country. Isn’t it? Normally, people transfer their EPF account from one place to another only during such a situation. However, that is not our point of discussion. Let’s just focus on how to transfer your EPF account.
Mentioned below are the steps that you must go through for the transfer of account-
i. Go to the authentic EPF site. Provide your UAN number and the required strong password you gave to login.
ii. There you’ll find an option ‘ONLINE SERVICES.’ Click on it and then choose the option ‘ONE MEMBER-ONE EPF ACCOUNT.’
iii. Provide your UAN number again and even submit your account information.
iv. Choose who will validate the transfer, i.e., your current manager or new one.
v. Then, the OTP gets generated. Make sure your phone is tied-up with your UAN number.
If you’re choosing the offline method, you need to fill the Form-13.
3. How many days will it take to get the PF account after the claim settled?
The number of days it will take to claim depends on your mode of form deposition. That is, if you submitted the form offline, it would take a duration of 20 days to a month.
While in the case of online, the procedure is quite faster. It usually takes about 2-15 days. Normally, you can get it within a week or so. Thus, it would be a smarter choice if you carry out the requisite procedure online.
4. How much can I withdraw from EPF for the renovation of the house?
As I’ve mentioned above, the amount depends on your monthly salary. That is,
i. It can be your one year’s salary,
ii. The sum of your employee’s share with interest accrued,
iii. The total cost of the renovation.
Whichever costs less gets handed over to you.
5. Can I use EPF to buy a second house?
Earlier it wasn’t included; however, as per the revised Section 68-BD of the improvised plan of EPF, you can. You’re free to extract about 90% of your EPF corpora for the purchase or construction of your second house.
6. Can I have two EPF accounts?
Certainly, yes! With an authenticate PAN card, you can frame another EPF account as well. However, you have to devote more money towards your second EPF account. So, make sure you have more cash to keep aside.
By now, you must be clear of how you have to proceed to fulfil your wife’s demands. Oh! I mean the improvement/modification of your house. So, what are you waiting for? A beautifully renovated house is waiting for you. Cheers!