By Ritu Sharma on Feb 27, 2019
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Your home demands some repairs or renovations if there are some damages or if you want to change the look of your home as per your preference. These repairs or renovations are a costly affair. They might involve lakhs of rupees which might not be possible for you to fund. There are home loans and personal loans to offer you the required funds but these loans charge you additional interest. What if you can use your EPF funds for financing the repairs or renovations of your home?
The Employees’ Provident Fund is a fund wherein you and your employer contribute 12% of your salary (basic salary + dearness allowance) in order to create a fund for your retirement. Though EPF contributions are supposed to be used after you retire, there are provisions in the scheme for partial withdrawal of funds for specific purposes. Renovating or repairing your home is one such purpose for which you can use your EPF investments. Let’s understand how –
EPF withdrawal for home renovations and repairs
Partial withdrawal from EPF account is allowed subject to certain terms and conditions. These terms and conditions include the following –
● You can withdraw a maximum of 12 times your monthly salary (basic + dearness allowance) from the EPF account for repairs and renovations of the home
● The actual amount which you can withdraw would be lower of the cost of renovations, 12 months’ salary or your contribution to the EPF scheme.
● The cost of interior decoration would not be included in the cost of repairs or renovation when calculating the maximum amount of withdrawal from the fund
● You should have contributed to the EPF account for at least 5 years to become eligible for withdrawal. This means that a minimum service of 5 years must be rendered with EPF contributions for 5 complete years for partial withdrawals from EPF account to be permitted.
● The house should have been constructed at least 5 years before the date of withdrawal. This means that withdrawals are allowed for homes which are 5 or more than 5 years old.
● Only one withdrawal is allowed for repairs or renovations of the home. Even if 5 or more years have elapsed from the date of the last withdrawal, you wouldn’t be allowed to withdraw again for renovations or repairs of the house.
● The house on which repairs or renovations are being done should be in the name of the employee solely or jointly with his/her spouse
Documents required for withdrawals
For withdrawing from the EPF account, you would need to submit the following documents –
● EPF withdrawal form which should be duly filled
● Copy of your Aadhar card
● A cancelled cheque of your bank account for bank details wherein the money would be transferred.
Benefits of using EPF money
● You don’t have to pay interest. The amount you use is the amount which you have invested
● Withdrawal process is simple and money is credited to your account quickly
● The remaining account continues to grow for retirement
So, if home renovations or repairs are on your mind, use your EPF account balance to fund them.
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